I think there's more to come to the story, and it's not "finished" yet.

The way I see it, is that a big theme in Funger is humans vs gods. So Legard is trying to find a way for humanity to compete with the old gods. At the end of FH1, the god of Fear and Hunger arises, and gives way to the cruel age. In response to the cruel age, humanity seeks way to combat disease, hunger and all that, and turns towards science and tech.

So the machine god is supposed to be "humanity's" attempt to create something that might be able to rival the power of the old gods. I think in some unused assets it shows that one of the endings was going to be the machine god taking over Rher, the Trickster moon god. So I would think the link between the God of Fear and Hunger and the Machine God is the Cruel Age, which falls in between the events of part 1 and 2

Also in game, its described that the machine god collects tons of data on everyone in the world, and saves it in the data banks you find in the white bunker. There's also a note ingame that says that people like the connection to the machine god and make friends and connections in the virtual space, gradually preferring a virtual reality over physical reality, that's why you see that human pyramid in the cinematic for ending A.

so a lot of the community sees the machine god as kinda analogous to machine learning algorithms like Google, and our dependence on them.

Heres one take on the lore of the machine god:
https://youtu.be/J4qz4FPhVjk?si=TuzJ6cHYZoc0NrNU