A Brief Recap
First things first: let's break down exactly what happens in the insane final sequence. To review, Annie Graham (Toni Collette) has unknowingly performed a ritual that has welcomed a demon named King Paimon into the household. Paimon, we learn, desires a male body, so he's set his sights on Annie's son, Peter (Alex Wolff). It turns out Annie's late mother was a member of a cult of Satanists who worship Paimon and whose mission is to provide him with a human vessel.
Annie also has another daughter name Charlie, who is deeply troubled after the loss of her grandmother, with whom she was closely bonded. Charlie dies early in on the film in a freak accident; her brother accidentally decapitates her by driving too close to a telephone pole.
Joan (Ann Dowd), who is part of Annie's grief support group and is an old friend of Annie's mother, seems to be one of the highest ranking members of this cult. She's working tirelessly to secure Peter's body for Paimon without Annie's knowledge.
As Paimon circles in on his target (with Joan's help), Peter starts to go crazy. He gets pulled out of school after he smashes his own face into his desk. After digging around in the attic, Annie discovers materials pointing to her mother's cult involvement and even figures out the deal with King Paimon. She tries to explain everything to her husband, Steve (Gabriel Byrne), but he's convinced she's had a mental break. Annie tries to destroy Paimon by tossing her late daughter's sketchbook into a burning fire, since that was the object she used to summon the demon into her home. This causes Steve to burst into flames and die.
After this, Annie becomes temporarily possessed by Paimon (or falls under Paimon's influence). The house has been completely infiltrated by members of the satanic cult; they're attempting to complete the ritual that will give Peter's body to Paimon. As Peter runs to the attic and attempts to escape, Annie decapitates herself. Peter jumps out the window and loses consciousness. In the final scene (which takes place in Charlie's treehouse), the ritual is complete. King Paimon seems to have successfully entered Peter's body, and the entire cult bows down in submission. Joan says Paimon's body has been "corrected," and we cut to black.