The term "shed" has come to encompass all sorts of outbuildings, from simple structures for storing tools to elaborate spaces. These two buildings, constructed by a Modern Shed (modern-shed.com), have electricity and plumbing.
Photo courtesy of Modern Shed, modern-shed.com
Garden sheds are often repurposed as yoga studios, guest bedrooms, and outdoor offices.
When siting a shed (or any other garden structure), consider how it will look from inside the main home and from the outdoor seating areas. Make sure its most attractive features are visible, and use plants and hardscape to accentuate its form.