I have always found mid-distance god setting odd why not have gods fully present in the setting sort of they can just wander around if they want?
If the gods are so far removed you can never interact with them, you lose out on pretty much all possible deity-centric plotlines. You gain the "are the gods real" question, but that doesn't lend itself very well to
plots per se in most cases--because you'll eventually need to come down on the side of "yes they demonstrably exist" or "they demonstrably do not exist," or at the very least "you have conclusively proven that it isn't possible to answer the question either way, it will always be a matter of faith for all time." I suppose it does juice up certain kinds of intra-faith conflict when it's not possible to get conclusive evidence either way, but that sort of thing is rarely going to affect more than one or two PCs at a time.
If the gods are so near-to-hand that they manifest personally and regularly in the wider world on a regular basis, you have a real problem with
deus ex machina, as Eltab said. You also have the problem of there being incredibly powerful, essentially-unkillable forces just sort of wandering around. That can be real tricky to turn to
useful ends, because as antagonists they're nearly unstoppable and as helpers they solve too many things simultaneously.
If the gods are in middle-distance--unable to directly affect the world most of the time,
needing intermediaries, but still powerful and cosmologically relevant--you get the best of both worlds. You get deities that can't stomp around, but also ones that can appear personally for plot stuff. You get to have some amount of internecine conflict, but still have the possibility of real answers. You get to have some amount of "you must believe in what you cannot see," but also some amount of "well done, my good and faithful servant." Plus, for any divine or devout PCs,
becoming those very intermediaries is a great plotline all on its own, but one that doesn't need to take center stage. It can be pretty low-key while still being super satisfying for the player. (It's a personal favorite of mine as a huge fanboy of Paladins.)
