How to convert shady corner in yard to usable space?
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Just looking at the photo, I believe that grass would grow if the soil is properly prepared. It looks compacted. However, I'm not a big fan of grass. There are lots of plants that would be happy with the amount of sunlight there.
I like the idea of a rock garden there, but consider the next step. Why not add a water feature to your back yard? A pond on one side with a rock hill on the other side supporting a multi-tier waterfall emptying into a stream that flows to the pond. Your yard looks ideal for this and it helps to mask noises coming from outside of your yard. Cost in dollars is not all that much, but there is a lot of digging, lifting and toting, not much more than you would expend just dragging the rocks in.
Lots of sites available at the end of a Google search to help you to design your water feature and plenty of suppliers of pond liners, pumps, low voltage lighting, etc.
plant hosta- there are several types on the market
Make sure the rock garden plants are shade tolerant ! Pine trees often create acidic soil , not a bad idea to ck the soil pH , usually local Extension Service does this for minimal fee or kits can be bought at garden centers . Add lime to correct acidic soil. Might have to raise the area or put in drain system if it's too wet and water collects here .
Not much grows under pine trees. I would do a rock garden with a bench and some yard art and potted shade plants with stepping stones that lead to the seating area.
As soon as I saw this space, I thought: flat paving stones and a yard swing with a cover. A cooler, quiet respite from the busy-ness of the world. ☺️
Might be a good place for a garden of items that grow in partial sunlight. Look up this site for vegetables; Planning Your Garden: Full Sun, Partial Sun and Shade https://www.weedemandreap.com/planning-your-garden-vegetables/. You could also put sunburst on the fence with 2" x 2" boards all coming from the middle of each section. It would look becoming and feed your family. Hope this helps.
I would do an herb garden there in raised beds as many herbs will also thrive in shaded areas.
I had a large pond at a former residence and have friends who put a waterfall and pond in their back yard. Never noticed any more bugs than anywhere else. Pond had fish that kept bugs at bay and when the waterfall is kept running, no mosquitoes. Both did attract a number of frogs.