One thing that always puzzled me about D&D 3.5 was the separation between evil gods (like Hextor) and evil entities that weren't gods but could still grant spells (like Yeenoghu). It always seemed to me that at the level of power there was no real difference between the two.
In this post, I'm going to describe my schema for how those concepts fit together. This schema is my default for generic/traditional fantasy and the mindset I use when thinking about stuff for my Tarfel setting (which is in desperate need of development). I don't have a relevant picture so here's a Pie Fiend.
Powers are supernatural, non-mortal entities that can channel their energy into magical gifts given to mortal creatures. Some Powers are also Gods (see below); Powers who aren't Gods are usually Elemental Princes, Demon Lords, Archcelestials, or other powerful beings.
Gods are Powers who have a cosmological function or concept that they work to maintain. How they keep these functions/concepts working is something unfathomable to non-gods. Even Gods that are in charge of things like slacking off or partying naked spend most of their time making sure that their concepts don't break down.
If a God dies then a cosmic imbalance occurs: either his function/concept stops working entirely or it goes out of control. For example, if a God of death is destroyed then the world perhaps death doesn't occur and all creatures continue to live on in horrifically wounded bodies (a lack of death); alternatively, everyone is dying from papercuts, splinters and scratches (an excess of death).
No matter happens, the death of a God is a very bad thing for everyone. It can take centuries for the quasi-sentient divine spark to find a new host and restore cosmological balance. For this reason, the Gods seek to conquer their enemies and bind them in divine pacts of servitude rather than kill them. Religious wars in the mortal world are often part of an indirect strategy to weaken specific gods.
Non-divine Powers have affinity for and limited power over some functions and concepts but aren't responsible for maintaining them; their deaths and their existences have little impact on cosmological balance.
Gods also have religions dedicated to them and a hierarchical priesthood of some sort as well. Depending on the God's personal attitudes the hierarchy might be a rigid structure resembling military commands or government bureaucracies or it could a very loose structure more akin to a social club. Magical ability often indicates the favor of Gods but doesn't necessarily give priests a higher authority. Gods tend to have a large number of worshipers and the support of local governments.
Gods also have Precepts, general edicts issued by the Gods themselves to do certain things ("Give to the poor from the bounty of your harvest") and avoid others ("Never extend or accept a truce with an Undead"). All Gods require their worshipers to follow their Precepts, although they generally don't notice transgressions unless these occurring on a large scale (such as whole region) or committed by those the Gods have empowered. Gods don't usually change their Precepts or declare new ones.
Supplementing Precepts are Doctrines, mortal teachings derived from Precepts but focusing on practical interpretations. So for example a doctrine derived from "Give to the poor from the bounty of your harvest" would be that only plants that can be used as food or clothing truly need to be shared while intoxicants like tobacco do not.
Gods rarely bestow magical gifts on those who worship them and devoutly follow their precepts; even more rarely a God may offer a non-worshiper such gifts if he agrees to convert to the worship of his new patron.
Non-divine Powers in contrast do not have Precepts or Doctrines; They offer their gifts to those who seem to fit with their interests or even at random. The contract is often simple: In exchange for the gift of magic to be used unconditionally as the mortal sees fit, the mortal must fulfill one task chosen by the Power at some point in the future.
The task given varies on the Power bestowing the gift. Fiendish Powers tend to choose particularly gruesome acts like cannibalism or torturing a sapient being to death. Celestial Powers instead select grueling but benevolent tasks such as giving every orphan in the city a loaf of bread or a long pilgrimage to many sacred sites.
The general train of thought is that once a mortal tastes the power and realizes that the tasks is easy to fulfill, the mortal will be tempted to make more pacts for more gifts. The Powers hope that this process will corrupt (or purify, in the case of Celestial Powers) the mortal and increase their own influence. Unlike the priests of Gods, the priests of non-divine Powers base their hierarchies on the magical gifts they've received from their patrons.
A third group along with Powers and Gods are Idols. An Idol is a non-Power that is worshiped. Idols may have Precepts and Doctrines but can't bestow gifts the way real Powers can, although some manage to simulate this with skilled applications of sorcery.
A final note is that Gods are nearly omniscient in regard to their function/concept but have difficulty focusing on and observing the mortal realm. Most of the time, Gods just can't tell anything is going on unless it's a big happening like a major war or a massive revolt. Gods mainly collect information from their Servitors (Outsiders created from the souls of the faithful) and from those they have bestowed their gifts upon. Sometimes Gods will also send Avatars, physical manifestations made of their own essences, to survey the mortal world. Many Gods prefer Avatars because they get to experience the realities of the mortal realm directly, without the lens of another mind altering their perceptions.
Non-divine Powers find it relatively easy to perceive the mortal realm, although their scope is usually limited to a single region at a time. These Powers also lack the ability to create Servitors. so they are limited to obtaining information from their few gifted followers or their Avatars.