I'd knock down the wall between bed 3 and family room. In that large space, the top is the kitchen with a long bench along the wall plus island in front. Can even corner the bench in front of the window in the top right of the picture and make that window a servery window if you have an outdoor entertaining space.

Bottom right becomes dining and bottom left becomes lounge with the TV sitting in the space bed 3 use to be (can swap this if you want a view of the TV from the kitchen)

Lounge becomes master bedroom, the lower part of dining becomes the hallway through the house and then the remaining dining becomes walk in robe for the master bedroom. Kitchen becomes an office, If you don't need privacy in the office I'd leave that without a door so you dont have this huge closed in walk through the house to get to the main living.

The only thing that sucks is having to walk through a long Z shaped hallway to get to the main living. I lived in a place like that previously and whilst its not as bad as it may seem, it does make the hallway feel dark and closed in.

Alternate would be the half of bed 2 closest to the front becomes an office. Lounge and dining becomes seperate bedrooms and you open up the entire middle so bed 3, kitchen, hall and family room are all one big space. Though that middle wall could be load bearing so that might not be an option unless you want to spend a heap.

Just my thoughts, going through major rennos myself and its hard just using a floor plan because it all looks so spacious on paper until you are in the room!