What is planned when the parents-in-law no longer live here? Will you then move downstairs and rent out upstairs? Or will you stay upstairs?
I would never voluntarily put the washing machine in the basement and constantly carry the stupid laundry up and down two floors.
I would remove the sink in the kitchen in that spot and equip the entire space with floor-to-ceiling cabinets, because then you can store plenty of supplies there, even for 4 people. This way, the pantry can be eliminated and used as a laundry room.
I wouldn't necessarily remove the wall in the children's bathroom area, we once had that in an apartment of similar size, and I found it quite practical. However, we didn't have another bathroom but only the tub/sink/washing machine room and the toilet cubicle, as is usual in rental blocks without windows. You could then shower in the evening even if someone was using the toilet...
This anticipatory planning with the parents wouldn't be that important to me given the current status quo, since the new living situation is supposed to take place first. How things will be at some point in the future would probably be more like groping in the dark because life changes are numerous; therefore, I would adjust it exclusively to the immediate needs.
Of course, there are better solutions than washing in the basement across two floors, maybe a washing machine integrated into the kitchen, and maybe it will also happen once that someone wants to shower exactly when the visitor heavily used the toilet two minutes earlier. Nevertheless, I find this somewhat dramatized because the visitor-shower-guest-toilet situation will probably never occur, and if it does, then at most 1-2 times in a lifetime. For this reason, it would be absolutely secondary to me; a guest bathroom without a window is no problem at all.
Reducing or even eliminating the pantry would be a good option depending on space in general (vacuum cleaner, paper waste, some tools, etc., nothing major but should be considered).
I would simply go by what is used often and what is used rather rarely.