At the time of surrender, most Japanese people knew the concept that the emperor was a divinity (he was technically a 'living god,' or arahitogami) but the implication that he was the object of religious veneration is a little deceptive.

First of alll, it helps here to know something about Japanese religious beliefs more generally. Any person when they are deceased is technically considered a 'god,' or really a kami. Pretty much any shrine by the side of the road houses a 'god' in this sense, also. Some gods are considered more important than others, and have multiple shrines devoted to them; sometimes people are fuzzy on what 'god' a shrine contains, if it houses more than one, if they merge with each other, and so on.

Compared to the notion of a Christian God, who's the singular object of intense veneration and faith, a Shinto god is something a little more quotidian. So when the claim was made that the Emperor was a god, it was a bit equivalent to saying that the Emperor was like whatever that thing was that you prayed to over on the corner to pass your entrance exams last year, or like your dead uncle who you cared about.

Which made sense, since you were expected to 'pray,' loosely speaking, to the Emperor, a fair amount in Imperial Japan. What's important about these kinds of observances is that they were usually tied up with the state in one way or another--they weren't generally acts of private faith. In fact, in the early period of the Meiji Restoration, when some people believed the Emperor was actually a God in a strong religious sense--that he was a spiritual being who could cure diseases, or had five heads, or whatever--these people were generally rebuked by the government for superstition. What you were expected to do by praying, rather, was to show loyalty to the government. Thus you made observances to the Emperor if you were in school, on state holidays, if you were in the military, and so on. Or, if you were watching the Emperor go down the highway in an expensive German car with a motorcade.

So the sense in which anybody really believed the Emperor was a god at the end of the war was complex. There were official exegeses of what this meant, in confusing documents like the kokutai no hongi, or principles of the national polity, but real interest in this stuff was arguably confined to true fanatics. What people knew was that the Emperor was very, very special and not like a regular person at all.

That said, the effect of the Emperor renouncing his divinity at the end of the war was pretty considerable. More remembered than the declaration of his humanity was the declaration of surrender, which had played over the radio: it was the first time most people had ever heard his voice, despite how constantly referenced he was in everyday life. And Hirohito had a very distinctive voice--if you're ever heard it, it was hesitant, a bit high-pitched, and a bit eerie. He also spoke in very elevated formal Japanese, which is a bit like somebody speaking Shakespeare-era English today.

So a lot of people were devastated. There are photographs of people prostrating themselves en masse in front of the Imperial palace, for example. This probably had less to do with whatever presumption about the nature of his divinity and more to do with the fact that he was a symbol of a nation in a state of immense trauma. At the same time, not everybody bought into this. The Japanese Communist Party, for example, wanted the Emperor deposed at the very least and a Republic declared--they stuck to this position until 2000, actually--because he was a venal manipulator of the people.

And today a lot of people could care less. There was actually a very calculated campaign to 'humanize' the Emperor that started during the occupation and has continued--this involved putting him in a modern suit-jacket, photographing him with Mickey Mouse, dilating on his interests in marine biology, obsessing over the personal lives of the Imperial family, and a range of other things. So, not a god. But also, not a monster--this was important because there is considerable evidence that the Emperor was also involved with war crimes and bore primary responsibility for the war: this continues to be a very unpopular opinion in Japan, and you can in fact be intimidated or stabbed by the far-right for voicing it.

So does anybody believe today that the Emperor is a god in any sense? Basically, no. But there's a lot of nostalgia for being able to believe that, for being part of the former Empire. In a lot of ways the Emperor still performs an analogous political function to the one he had in the prewar era, and that's something that troubles a lot of people.