For the children, they need somwhere to play outside and it certainly does not have to be grass. A play area, maybe rubber based with bark on top so it looks nice. A home made music station with pots and pans and wooden spoons hanging somewhere, a bug hotel, little table and a small bench or chairs so they can have tea parties, something equivalent to a home made wigwam where they can sit and read or tell stories, a climbing place maybe, a swing maybe
The concrete steps can be changed to wooden steps with low risers, would be safer. A dry border needs composted wood bark and a little bit of depth, remove any big stones then add short lavender plants like `little lady`
I have just made over my own garden which was also built on an old quarry and then filled with builders rocks and rubbish. I is also small so I have chosen not to have any grass and I have mixed fruit and veg in with flowers
Back to the steps, this is what I would do because it would be a manageable job for me (over 70) I would get the concrete out and make shallow tiers that could contain gravel then on top of the gravel I would source rectangular non-slip rubber stepping stones. Small retainers could be hammered in to stop the stepping stones from sliding anywhere
In summary, I would do the 3 things ie lavender in the dry border, change the steps and make a small play area