The homes I admire the most aren't necessarily the prettiest or the most creative - they're the ones that reflect the homeowners' values and how they really live day to day. Your home shouldn't be a museum or a storage facility or a hotel. It should support and nurture you and your family 365 days a year.
You don't have a 365 Day a Year home if:
You almost never use your dining room for...dining. Consider what else you could use this space for - a playroom, an office, a home library, etc.
Your home is too big for you, but you're afraid if you downsize or turn your guest room into something else your friends and family won't visit. It is nice to host if you can, but if this just occurs a few times a year, really think about making a home that fits you every day. You can still welcome people into your home even if you can't host them overnight.
You like the idea of not being a "tv person" so you hide your tv away, but in reality you actually watch tv pretty regularly. Get real with yourself. In theory, it's nice to have a living room that doesn't revolve around a television, but if this is something you spend time doing, it's just silly not to have it set up in a way that makes this experience comfortable.
You're an empty nester and your kids' rooms are preserved just as they left them. Dismantling childhood rooms is hard for both parents and kids, but if it's standing in the way of putting your home to its best use, let your kids know it's happening and make sure to offer them things they may want to keep (if you can't or won't store them). Kids: it's reassuring to think your room will always be there for you if you need it but put yourself in your parent's shoes and be supportive of their decision.
You have large exercise equipment around that you never use. My friend has a treadmill in her living room, but you know what? She uses it every single day. She wishes she had somewhere else to keep it but she doesn't and has decided it's more important to have it than to have a picture perfect living room. So if you have something similar and you're really not using it, set a deadline for either committing to using it or committing to losing it.
You have place settings for twelve just in case you have a big dinner party...someday. If you have room for this, okay great, but if you really don't, ditch it and reclaim some space. If you do have that big dinner party some day, see if you can borrow plates from friends or neighbors or just rent them.
At the end of the every day you're dragging your kids' toys back to their rooms. Plenty of kids don't want to just play in their rooms - they want to be near you, they want to be in the thick of it. This doesn't mean they should leave toys strewn all over the house, but you can create some space in a few primary rooms to put them in at the end of the day at least while they're young.
These are just a few examples of when our homes don't reflect our lives. What are your examples?