According to the teachings of the Church of Law, there is only one true god: the God of Law. He -- or rather it for the manifestation of true law does not possess an anthropomorphic form -- rules the prime material plane from far outside of it. It is said he cannot interfere directly in the World, and the exact reason for this is hotly debated. Some say that it is not that he is incapable, but rather he refuses to do so out of mercy. His presence would cause the World to become nothing more than a solid block of matter. Others claim this is nonsense. Clearly the God of Law values free will and as such he refuses to intervene because doing so would impede on humankind's right to make its own decisions. Many theologians claim that this too is inaccurate. Clearly the Prime Material is a place of Chaos, a realm of sin. The God of Law cannot intervene because its wickedness would destroy his purity.
Still, he can intervene indirectly. Clerics are the most obvious examples of this, with their magical powers and ability to commune with the higher spirits. His followers claim that he gives these powers to men and women in order to protect the people of the World from the things that lurk in its dark forests. Indeed, his Clerics' ability to turn the undead has greatly helped civilization's battle against the darkness. These are not his only servants, however. From time to time the God of Law has also sent angels down to the World to impart knowledge, fight in great cosmic battles, or generally to defend humankind from the minions of the Pit.
But then what were the entities that humans worshiped before they found the light of Law? According to the Church, before the creation of the World there was a great war in Heaven. The God of Law -- being omnipotent -- was able to cast those who rebelled against him into the Pit. Thus demons were created. There were some angels who neither warred with the God of Law nor supported him. For these, he made the World as a prison. These entities, as is common knowledge among the clergy of the Church of Law, became the Elves and Fairies that now linger in the World.
Some theologians though have used this story to explain the origin of the Old Gods as well. According to this theory, the Old Gods are simply the most powerful of the Fairies. Humans worshiped them in order to appease their fickle natures and to avoid being pulled into their terrible gullets. However, not all of the Old Gods neatly fit into such categories. Their alignments vary wildly, as do their appearances. It is possible that some are demons or angels whose alignment has changed after years of being away from the God of Law or due to contact with the Material Plane. Their forms remain the beautiful visages of heavenly creatures or the twisted and bent shapes of infernal monstrosities, but their form no longer matches their function.
These issues, oddly enough, are one of the few places where magicians and clerics agree. According to several magical models of the universe, such an omnipotent being would have to exist. Also, despite the fact that the Old Gods are infinitely more powerful than an average mortal they can be slain by a being of equal power. This would mean that none of them are the divine entity necessary to fill the whole in the magical model. Most members of pagan cults are too busy with other matters to dispute these ideas. To them, it does not matter if the thing in the woods is really a "god" all that matters is that they need to make sure it doesn't eat them.