How do I enhance a downtrodden area of front yard?

Make a retaining wall around the tree and dress that up with mulch.Make rocks gardens in the area and use container plantings for your location.

My vote is to install some sort of decorative free form border and fill with mulch.

I have a neighbor with this type of problem, they mixed several sizes of stones and river rocks and planted some small shrubs so that someone walking is sort of guided to stay on a certain path through the yard. Good luck!

rock border and if you add some low light plants adid some decent topsoil as you have a lot of erosion. Mulch around them with decorative mulch or stones. If you want to go all out, google pebble mosaics!

Digging around the tree to make a flower bed, is really not practical due to all the roots, You could turn into a free form raised planter, fill it with soil and plant pretty things to give you color. and it would help keep folks from walking thru the area.

There are "retaining" wall options out there that do not require a footer, and stack with out mortar. You would want to get it mostly level for looks... but a little sand and a little work with a shovel should get that done easily. And a planter 2-4 blocks high would work nicely.

Your local nursery would be able to guide you as to what plants would do well in shade and should be able to sell you garden soil in bulk.

OR you could do a low maintenance, no maintenance version and put in a low border and then stones or rocks... or stones with rock... some big rocks too, plants could go in pots or containers (an old wheelbarrow etc. Don't forget to use a good quality weed fabric (there is nothing worse than trying to get weeds out of a rock area.... learned that lesson the hard way)

btw- underneath trees is not just difficult to grow things bc of the shade, trees require a lot of water and nutrients and they will take so much other things have trouble surviving. A birdbath would be nice under the tree in your newly spruced up area as well

If you do decide to put stones or river rocks in the area under your tree, be sure to put down a layer of good landscape cloth first. Otherwise, over time, the rocks will sink down into the soil (especially if people step there), and you will have a much more difficult area to work with.

My choice would be to use a good looking mulch, so you don't have that problem. And be sure to keep the mulch a little away from the trunk--don't pile it up there, or you can harm your tree. If you like the rock idea, you could use big rocks and plants right near them.

One other possibility is to plant a nice groundcover. I like pachysandra or gallium odoratum (sweet woodruff), my favorite, which grows quite easily on most soils. It gets tiny white flowers in spring, smells good, and is easily controlled.

How about putting in a park bench and surround it with pea gravel for a place to relax? You could add a couple of planters with plants to soften the effect