Garden 'up' is exactly what I'd do - that blank fence is calling out for a cloak of clematis or something like that. Could you extend the raised bed in the last picture across the area, and put another line of the stones at the base of the shed out to meet the raised bed? One problem is to protect the base of the fence from the soil in the raised bed. (A layer of heavy plastic against the fence perhaps?) Alternatively, end the raised bed where it turns the corner and have the strip of bed along the fence at ground level. That's probably the easiest/best option. I'd continue the planting theme - whatever it is.. - of the raised bed along the new bed at the base of whatever vines you plant.

Karen, as usual, when presented with a space to design for my mind's eye quickly sees a 'slide show' of finished, mature designs possibly applicable to the situation. This happened as I viewed your pictures; at least twenty possible ideas to study for further consideration. Quickly I dismissed these thoughts and concentrated selfishly on "what if this were my space, this little bit of good growing light mostly unseen from the rest of the property"? A horticultural playground, perhaps?

Cutting to the chase...Following my interests and passion for experimenting I would:
1. Set up a timed drip irrigation to the area.
2. Experiment with this new, much touted method of using plastic gutters to grow small veggies/herbs installing them on the fence on brackets keeping them away from the wood. Do a search for...using gutters to grow plants. Self explanatory. This Zone 8, protected spot should allow 12 months of copious salad greens.
3. Have you constructed a living wall yet? Neat spot to trial a smallish one playing with best plants for your growing area.
4. Old windows leaning up against the fence during the winter would give you plenty of space for winter sowing and propagating woodies. If you want to do the latter a search here on the Propagation Forum for my ...toothpick technique...will give you an easy method. I have done several posts about it resulting in emails from growers around the country who find the method very helpful.

Just a few quick thoughts. I see your space as utilitarian. Easy to make it beautiful. But it is also important for the dedicated gardener to have a 'classroom' spot. This could be yours.

What's in the shed karin? just generally, I don't want you to give any secrets away.

Ink, it varies from time to time. It has held everything from projects to garden tools and scrap lumber. Call it multi-purpose. Not a garden pavillion or an external office, but maybe someday...

Nandina, those are very interesting directions, as yours always are. Not at all out of the question. I've not been a food gardener, much, partly because I believe our soil has a high lead content from a century of paint peeling off the house (and soil has been moved around a lot) but utilizing the fence as you've described would be a way to circumvent that problem. And I have an old window in the basement...

Woody, you've nailed the problem with planting in the ground, which is that it generates the urge to make a raised bed along the side and/or back fence. There is something about gardening (weeding, planting, snipping) where the ground is sloping away from you that is really annoying, and it's one of the reasons I'm hesitating. Protecting the wood with plastic may or may not be effective - in this climate, stuff stays wet all winter and rots quickly if it can't breathe.

Thanks for your thoughts so far.

Karin

maybe someday...

sounds like potential to me.

Pave the whole area, I won't offer suggestions on material or you might never talk to me again, move the door of the shed to the side (or cut in another), paint the fence (mural) or add treillage, growing stuff is an option,get ONE nice relaxer and a small table, put a fridge (for beer or white wine) in the shed together with furnishings for wet days, a desk, run some electricity up there, close off the end and voila "Karin's Place- Private Keep Out"

Ink, you nailed that one! It's definitely in my personal slide show of options, we even thought of moving the door of the shed, but that likely won't happen. I like the details you painted. Then I'll just add Nandina's gutter planters, and can sit there enjoying a fresh salad!

I'll have to find a way of discouraging binners from peering over the fence... "treillage" will help. I might even stick to one paving material too :-)

I have a Davidia that might go in the corner too, eventually making it a shady retreat.

KarinL

Herbs? The place where mint cannot escape? It's a pretty enough fence, no need to cover it, but it might be useful to show off something.

HOLY MICROCLIMATE !!!
Being here in the frozen tundra, I would love to have a small protected planting area like this to grow some plant varieties that would not normally grow here. Plants to dazzle and wow your visitors. This space reminds me of a friends yard with a south faceing protected location between two garages. Hibiscus normally won't grow here but is doing great in this spot. I tried 3 times to transplant sprouts to my yard but they don't survive the winter. Maybe you could find a special plant for that area!

If the soil wasn't toxic, I'd say what a place for grapevines!

Columnar apples or dwarf fruit trees if you have enough sun...maybe in large containers, or...espalier the fruit trees?