Who is King Paimon?
That ending is a lot to take in, but once you realize who Paimon is and his significance in demonology, the rest of the film starts clicking into place.
Paimon first appeared in the anonymously written grimoire called Lesser Key of Solomon, where he's called a great king, one of Lucifer's most obedient devotees, and a master of art and science. In most lore, he is known for riding a camel, having an effeminate face, and for following a procession of demons playing instruments like cymbals and trumpets. Solomon also states that Paimon is the ruler of 200 legions of spirits, most of them angels, and that to summon him, "thou must make him some offering."
Additionally, Paimon has many powers, among them "knowledge of past and future events, clearing up doubts, making spirits appear, creating visions, acquiring and dismissing servant spirits, reanimating the dead for several years, flight, remaining underwater indefinitely, and general abilities to 'make all kinds of things' (and) 'all sorts of people and armor appear.'" A lot of those powers are evident in Hereditary, especially after Annie performs the seance to communicate with Charlie. That's when the supernatural element of the film ratchets up.