You might think these terms are interchangeable. However, there’s a distinct difference between a formal living room and a more casual family room.
The former is a space for entertaining guests of all types. Meanwhile, the latter is where household members can go to hang out.
Formal living rooms are designed for active conversation, not for relaxing after a day at work. Furniture pieces like sofas or armchairs are normally facing each other for easy conversation. In contrast, family rooms typically revolve around a television or other entertainment.