So what was granny in your opinion? (Spoilers ahead)

this was my understanding of how she played part in all this.

Ellen, the grandmother was the head of the coven and was titled Queen Leigh as we see in the end scene. She was committed to summon King Paimon by sacrificing someone in her family to be the body host, preferably healthy young male. first she tried it with her son, who at the end hung himself (we were told by Annie in the grief support group scene). then her first grandson, Peter, was born. She tried to get her hands on Peter, but Annie wouldn't let her touch him one bit.

Later Annie got pregnant again, Ellen was expecting it would be a second grandson (we see the evidence of this when we see a welcome mat with the name "Charles" embroidered), but a female was born instead, so they named her Charlie. This time Annie let her guard down and let Ellen take care of Charlie.
Ellen took this chance and summoned Paimon with Charlie as the body host (we see the evidence of this when Charlie cut a dead bird's head and later found out that Paimon has a thing for decapitating heads). Charlie definitely was not an ideal body for Paimon, because she's a female and have allergies and such.

in order to get the ideal body, they were going after Peter. so the coven went into elaborate plan on retiring Charlie as the host, meeting Annie at the grief support group, taught her an incantation to 'conjure her dead daughter' with one important point that every family members need to be in the house. i quote what she said "Every member needs to be in the house. Your son, everyone. Very important." it was a ruse..

so one night Annie went and did the ritual to speak to her dead daughter, but that's not all, she also unknowingly summoned Paimon for as it turned out that was the main purpose of the incantation. After that night, we see Peter began to experience things and behave very strangely. from this point they were nearing their success of making Peter as the body host. in the end they did the finishing touch by chasing peter to the attic and let him threw himself out of the window
at which point we see Paimon's soul or whatever possessed the lifeless body of Peter.

i'm not sure how the decapitated heads of family of three generations played part in this ritual, it might had been significant to the ritual.

also to answer your question about whether Annie was dead. Yes, in the ending we could see her being possessed and floating in the attic and was cutting her throat using a wire of some sort.

this was my understanding, it might not be very accurate and i might've missed something but i wanted to chip in my opinion

Grandma was the cult leader.
There was a photo album of the cult standing around her in a circle, praising her.

And obviously she wasn't a demon herself - cause she had a lot of books about demons - something a demon themselves wouldn't need..

Annie was most certainly dead...you can see several massive arterial sprays with each slice. Besides, we can hear a thudding sound as soon as the sawing noise stops.