I tend to think of the Kais as the overseers of the universe. The normal Kais have the most direct contact with their section of the galaxy, and they report to grand Kai. My guess is that the supreme Kais were once the "protectors" of the universe, hence why they were the ones to battle Buu. I've always thought they were separate, just like Beerus, in that they have their own place and job to fulfill.
I dont even think the normal Kais are gods at all tbh. Goku was able to use instant transmission to go to king Kai (north) planet several times, meaning he had a power level that could be sensed. The supreme Kai on the other hand could not, neither could Beerus, Whis or God Goku.