1. Devotion is a mechanic that cares about the number of mana symbols on your battlefield. For example, as you pointed out, Heliod, God of the Sun is a creature only when you have devotion to white of five or higher. So in your example, with just the Banisher Priest on the battlefield, he would not be a creature, but he would still give vigilance and you could still use his activated ability to creature 2/1 Cleric tokens. Note tha the mana symbols of Heliod also count, so your devotion in that example would actually be 3, not 2. If you also play out a Precinct Captain, your devotion would be 5, and he would now be an indestructible creature.

Note that there are cards other than gods that also care about devotion. Two examples include Gray Merchant of Asphodel and Fanatic of Mogis.

2. Devotion decks can also refer to decks that use Nykthos, Shrine to Nyx to ramp into mana fast. So the real beauty of this deck is not so much to get Heliod to be a creature, but to ramp into mana to be able to play out cards like Elspeth, Sun's Champion and Angel of Serenity much faster than you normally would. For example, let's say it is Turn 3 and that you have three Plains out and you've played Precinct Captain and Boros Reckoner. Now it's Turn 4 and you play out Nykthos, Shrine to Nyx, and tap two Plains to activate it. This generates 5 white mana. Tap the third Plains, and now you have 6 mana. Boom, play out Elspeth, Sun's Champion on Turn 4.