As we have noted earlier, Hinduism is not in the strictect sense a polytheistic religion. This may come as somewhat of a surprise since some have estimated that Hinduism has as many as 300 million distinct deities. While it is doubtful that anyone could provide an exact count of Hindu gods and goddesses, there can be no debate that Hinduism has an abundance of gods. Why can we not conclude that Hinduism is simply polytheistic? The answer lies in Hinduism's philosophic systems saw the mutlitude of gods and goddesses as an expression of a single underlying divine power.
The latest writings of the Hindu scriptures are known as the Upanishads (probably written down around 500 BCE). These are largely philosophical discourses and dialogs that reflect on many important concepts including the nature of humanity and the nature of the divine. The basic underlying theme of the Upanishads is that the human soul (atman) is part of the universal sacred power (Brahman). Although stopping short of claiming absolute unity, the Upanishads argue the the atman (individual soul) emanates from the Brahman, and thus the two share the same nature. Consequently, one may look within to discover the great soul of the universe.
The Pantheism of the Upanishads indicates that the seeming polytheism of Hinduism is distinct from the type of polytheism where each god or goddess has its own realm of power. Rather, in Hinduism, each deity is a manifestation of the sacred power (Brahman). As such, they are not completely separate from one another. Moreover, because the universal sacred power is present, each deity also represents the fullness of Brahman. This is clearly different from the classical polytheism, where each deity was associated with a distince realm of power.
To put the matter in terms of the immanent and transcedent, it is possible to see the individual deities (as well as the atman itself) as a way of making the transcendent Brahaman immanent in the lives of individuals.
In the Eighth Century AD, the philosopher Sankara (788-820), formulated a philosophic system known as Advaita Vedanta. According to this philosophy there is an absolute unity between Brahman and atman. In fact, the only reality that exists is Brahman. Our perception that we are separate beings from Brahman and from one another is in fact an illusion. To a large extent, this philosophic system is non-theistic; that is, it does not emphasize the notion of a deity or deities that have a separate existence.
Please note that the above discussion is not meant to imply that Hinduism progressed from pantheism to monism. Like many concepts in Hinduism, pantheism and monism exist side by side.
For more about some of the Hindu deities, view the online video, The Hindu View of God