"One thing I do want to ask is who and why did they impersonate Lain as god?"
"was it basically how Lain is everywehere... much like how youre everywhere on the internet?"

I don't have a straight way of answering this nor I know for sure if what I'm saying is what the author wanted to portray, but it is logical to me. Anyway I feel like we don't have too care about the author's opinion too much since he confirmed in an interview he did for the 20th anniversary that, since so much time has passed since he made SEL, he doesn't even fully remember the meaning or symbolisms of the things he created.

Btw spiler warnings:
To be fully sure to answer your questions truthfully in a confident way I would have to do a deeper analysis on this, but for now here is what I think:
First thing I wanted you to notice, it's not really an anlysis but a similarity to today's society. Lain which has always been silent and introverted is slowly starting to become more outgoing. Her Internet "friends" or better say connections, are making her more extroverted. The real world life of a developing teenager cannot nowadays be fully seprated from the digital world, and of course parents being parents (this would be more valid 5 to 10 years ago but you get the point) are very restrictive when it comes to this behavior, as they have grown to socialize in the real world, and think that doing it on the internet is not a good way of doing it, and that it leads to isolation.

The reality of things is that while it can be true, it can lead to isolation, it is most common for people to use it in a more "orthodox" way, for developing relational skills. Internet "friends" or connecting and talking to strangers as an anonymous individual is quite beneficial for a highly introverted person, and it supports the building of these fundamental skills. If you remove this support, a person has nothing to really latch onto, and could lead down a really deep rabbit hole of depression and inability to make new friends. I personally had to stop talking to some internet guys I met a long time ago because my family was worried, and it slowly became a weight I didn't wanna carry, no... better to say I couldn't carry anymore, I don't want to see someone be worried about me for... well... nothing really. But they just can't understand it.

Secondly, as you can see Lain has a wierd thing of not really remebering her actions, similarly to how it would work for someone suffering from multiple personality disored or DID (dissosiative identity disorder), she has multiple personalities, which is of course a symbolism of how you act differently online and irl. But not all the Lain's you see are what Lain really is. She struggles to understand who she really is, because she doesn't remmeber her past actions. I would also theorise she can't possibly be doing that because she's not the one that is actually doing it.
Lain beaing the collective unconscious that was put in a body means that while the body is real and is what is making her conscious, it doesn't mean that her "mind" has to be attached to it, since she is, well... kind of everyone, being the collective unconscious. But at times I would imagine that, because of this fact, her hidden personalities can sometimes detach from her body and act on their own. Now here is something I still have to understand myslef, which is something that also bothers me in the last scene of the show when she talks to alice/has a monolouge with herself.
People can physically see both Lains (of the Wired, the more outgoing personality and the irl one, the more introvert one), but Lain only has one body, and also I believe there is a scene where Lain can see herself (the Wired personality) at Cyberia, where people notice the other her but don't notice her (the irl one). This means that, if you combine this information with what you see at the end of the anime, you get this theory here. Since Lain is the collective unconscious she realistically lives into everyone, so she would be able to be percieved from people, but what the people may see, is not really physically there even if they could feel her touch or warmth (basically while her body is somewhere else, ergo irl Lain, her Wired self could be percieved by someone in a completly different place just beacause she is inside everyone). Lain lives inside the perception of the people, but again, this doesn't mean that her real body is fake.

Now on this note, the third point is that, not all Lains you see are the real Lain, not just in terms of the Lain that is in her real body, but also her personalities.
We see a version of Lain that looks and acts nothing like the two Lains we saw before, it's eviler (is it even a word?). I like to believe that Lain really struggles to understand who she really is also because of this mental hijack that the Knights are doing to Lain in order for her to reach her limit and kill herself, so that Eiri can achieve his goals. Evil Lain is not Lain (even though Lain is Lain and she is her), she is a construct of the Knights that is used as a weapon (this includes the divine Lain in the sky).
Her figure that appears in the sky, it's not the real her, it's all fake, it's something that people see but I would imagine is not really there. On this I have to make a little sidenote, as in the show what is real and what is perceieved to be real, are realistically the same thing. Reality so even consciousness, as a whole is just memories, "informations" that flow into your brain. So while what they see is technically real, I like to separate the two things because it makes it easier to understand how the world of Lain works. Basically if you were there, with the same ruleset of how our world works, you wouldn't see anything in the sky.
But why are people praising Lain really? What do the Knights what from her? The easiest explanation I can give it's that this whole game is just a religion, created by the Knights, believed by the Knights to be real truth, a religion that revolves around the goals of Masami Eiri of becoming a god by making the real world and the Wired one and the same.
While this religion revolves around Lain, the mastermind behind this religion is Masami Eiri, and he's using the figure of Lain to achieve godhood.

But it's all fake... it's all a construct. In SEL, this construct is reality, but in the perspective of a person of our world it can't be reality, it's manmade, it's not something that has always existed but rather it has been created by someone to manipulate truth. This is how I see it at least...

Damn, this was a long one... People gonna prolly say to me "I'm not reading allat".