did something happen in Hindu history that made manifestations perceived as Gods?
Yes, the decline of the Vedic age lead to the formation of many sects. Their most popular literature were the Puranas which started to appear in the 3rd and 5th century, each dedicated to the worship of one of those manifestations. The original purpose of these Puranas was to explain the more abstract and metaphysical ideas in the Vedas which were too difficult to grasp by the layperson, so the Puranas through myths and narratives tried to explain the various Vedic concepts. They were very imaginative, but also utilised outrageous narratives. An example is when Ditti conspired against Indra to beget a son that would kill Indra, Indra entered her womb and then:
"With his weapon vajra, he sliced up the baby inside the womb into seven parts. The baby naturally began to cry at the pain.
Indra kept on saying, ma ruda, that is, don’t cry. But the baby, or rather its seven parts, would not listen. Indra thereupon sliced up each of the seven parts into seven more sections, so that there were forty-nine sections in all. When these forty-nine sections in all. When these forty-nine sections were born, they came to be known as the Maruts, from the words that Indra had addressed them. They instead became Indra’s followers or companions, and were treated as gods. "
Now, you can see that the layperson reading this could easily take this to be literal, and take Indra to be an actual god in heaven who weilds a thunderbolt weapon and slices babies into pieces that talk. This is what has happened, the layperson has taken Puranic stories literally and formed a concept of several gods. His beliefs are not dissimilar to Pagan religions.
However, the Puranas were never meant to be taken literal, they are myths and stories. Sometimes they do discuss philosophical concepts, history, but mixed with a lot of mythology and dumbed down immesenly. Mostly they are written to teach the common man Vedic ideas.
The above account of Indra entering into Dittis womb and slicing up the baby in 49 pieces is referring to the Vedic principles of how the manifestation of intelligence destroys ignorance and then causes knowledge to come into being. Indra, simply means, "the powerful" and is associated with both intelligence and electricity. Indra is celebrated particularly in the Vedas as the manifestation of that divine that parted the eternal darkness(vritra) fissioning it into many and caused the universe to flow into being, making ONE into MANY. By this act Indra forms the suns and stars, which form from the space released through the fission and hence why the suns and stars are poetically described as the infinite eyes of the supreme being in the Vedas. Indra is also described as the principle which causes clouds to rain, by the electric discharge(vajra, literally meaning iron thunder bolt) he causes the rain clouds to fission, causing the waters to flow out, which are carried down by the Maruts(literally, particles or waves) and the Maruts then carry water the water up again through evaporation and form more clouds.
Thus all three processes: the fission of space to form stars, the fission of clouds to release rain, and the fission of igorance to create knowledge is all presided over by the deity Indra, who in turn is a manifestation of cosmic intelligence. There are literally thousands of verses on intelligence in the Vedas and how it functions.
Is Indra real, as in an independent entity? No, the Vedas never describe the devas as independent entites, they are often joined up Indra-vayu, Mitra-Varuna and sometimes conflated with each other, and often described as emitting from one another. In fact the word Deva itself doesn't mean 'god', but means "shining one/luminous one" the word Deva comes from the root Dev(to shine) and from here the words Div(day) divya(divine) They simply refer to the principles in the universe, in fact similar to fundamental laws of the universe. They are also phenomenal divinities, that is underlying all distinct and unique phenomena is a divinity or deva, the purest expression of that phenomena. Thus what happens if there is no phenomena? There are no Devas and hence why the Vedas declare emphatically that the Devas are posterior to creation and only the ONE exists.
Now, maybe you can appreciate how difficult it is for the layperson to grapple with these abstract and metaphysical ideas. Hence the need for Puranas to explain the same in stories. They are considered the most inferior of scriptures though, and many reject them(I also reject them) the most superior of Vedic literature is surprisingly not even the Vedas themselves, it is Upanishads, which directly expound on the metaphysics in the Vedas. They were only revealed to a very select few in private with the Guru, who were intelligent and noble enough to understand them.
In the classical age another esoteric and elite system formed to describe the real import of the Vedas, the secular six schools of Hindu philosophy. They were able to expand on the all the concepts discussed in the Vedas by examining them very vigorously and explaining the particulars in secular and prose language. For example: The Vedic creation account does not give the stages of creation, but only gives a very brief and poetic description of it, which the Samkhya(analysis) school expands on and then explains all the stages of creation and categorises all evolutes with hair-splitting analysis. Another example: The Vedas only allude to the existence of atoms, again poetically(visvadevas) but do not give any physical descriptions. This is expanded on by the Vaiseshika(physics) school which using similar vigorous analysis to the Samkhya, explain the particular of atoms and their various aggregates etc.
Similarly, eveything that we know to be Hinduism: Yoga and meditation, Ayurveda, Hindu music, Hindu sciences and crafts, Hindu beliefs on karma and reincaration is all derived from the Vedas. That is not to say the Vedas describe them, the Vedas only describe the principles(universals) not the particulars. This is what makes Hinduism a very accepting, highly adaptive and tolerant religion. It is not concerned with particulars, you can live life however you want, worship god in anyway you want as long as you are in consonance with Vedic principles which determine our eternal dharma(eternal religion)
Our eternal religion is simply to cultivate our intelligence and compassion. There are no dictates on how to do that. You find your own way, as long as you live a life of wisdom and compassion. In Hinduism there is not one way, but countless ways, and many ways have been immortalized by great saints and Gurus. Lord Buddha and Adi Sankacharya took the path of knowledge; Saint Kabir, St Francis of Assisi and Guru Nanak took the path of devotion. Many take the path of work by doing good deeds. Some take the path of music and art. As varied as humans beings are in their nature, as many paths are there to the supreme being.
This is also why Hinduism has no problem accepting Christians and Muslims, and consider their path just as valid as all the Hindu paths. In fact their path comes under the Hindu category of path of devotion and work. I recall how a story of how a Christian came to a Hindu guru and asked him how he could become a Hindu, the guru replied by becoming a good Chrisitian
Hinduism does not subscribe to superficial labels like "I am a Muslim, I am a Hindu, I am Sikh, I am Buddhist, I am Jain, I am Vaishnava, Shivaite" they mean nothing. Hinduism is only concerned with eternal principles, and if you are following those principles, you are a Hindu, even if you identify with other labels
