Legion/WMG

"Michael" is actually Lucifer
He just changed his appearance to fool Gabriel. And the baby is the antichrist. When Michael pulled up at the diner, Charlie looked at him like he looked familiar. Perhaps the reason why was because HE was the father of the baby.
 * This has officially become my new head-canon because goddamn, the movie makes way more sense that way.
 * Just let it be known that this would imply that Charlie is okay with bearing the anti-christ (despite her inner monologue at the end and all the time we see her brooding), and that Lucifer can fake himself dying and being ressurected pretty blatantly from Heaven. And that God would let this little thing occur, since that would likely mean the angels were actually demons, as God has little reason to make killing the anti-christ look like a demonic invasion. Anyway, to each their own.

Jesus helped Michael escape to Earth.
Jesus died for humanity once, and still believes they're worth saving. After hearing from his Father that he's gonna wipe out humanity, he impregnates Audrey with a child (or reincarnated as that child) that would give humanity another chance.

Michael kills the baby's father at the beginning of the film
The first time we see Michael he robs a Taiwanese mafia hideout, takes a cop hostage and then kills a possessed cop, when he arrives at the diner he's using the police car he stole from said men. Thing is, Charlie sees his car first and him later and so runs out with eyes full of hope, until realising that the man getting out is not someone she might know. Since cars are usually assigned to specific officers and the number of the car is written clearly on the side then Charlie knew one of the two men. The way she looked at the car and how crushed she was when she saw Michael might mean that she was expecting the child's father to come and save her.
 * A possessed elderly woman attacked them shortly after all communication was lost. I don't think I'd be the only one who'd want an armed cop with possible intel from the city by my side. She probably thought Michael was just some nobody who robbed a cop's car and escaped the city.

The original story of the film had Satan in Michael's place
The original plot involved Satan defecting from God in a pseudo-reversed biblical story. Instead of being too prideful to bow down to the humans, he was too prideful to listen to god. In a way, he supported the sinful humans while God wanted to wipe out their sin. The story then plays out as Satan trying to have the anti-christ born to have a fighting chance against God. The first angel that appears in the diner is Gabriel since he's the messenger but Gabriel is killed in the. After Gabriel's death, Michael comes down and chases them in the final scene. As opposed to  Satan is. This would explain the contradiction where in the movie, Michael states that  yet Jeep and Charlie still carry guns: God hadn't , there is just an empowered Satan now to protect the anti-christ and humans. It'd also explain the absence of any mention of Satan in the film despite the heavy religious themes. It had to be changed through production due to the obvious contraversy so Michael took on the role and Satan is not mentioned at all.

The Possessed aren't angels
The actual angels like Gabriel are shown to be, though very flawed, pragmatic and, in their own way, noble. This contrasts with the Possessed, who are often sadistic and favor painful, humiliating kills to a quick, efficient job.

When Michael is talking to Jeep, he mentioned that "when He chose you as the object of His love, I was the first to bow." It may be the structure of the sentence, but that implies there were others God could have chosen. One of those races could have come to win some Brownie points with God.

My guess is that they were a telipathically-linked cloud of spores that immersed themselves in food and water supplies-- the isolated diner's occupants likely hadn't eaten or drank from anywhere but the diner's own supplies since the invasion started. When the spores get in someone, the spread out as tendrils throughout the body. They project a bit at the palms, letting Possessed crawl on walls. They make the brain irrelevant, meaning they can survive broken necks. They even restructure their hosts, leading to the shark-teeth of most Possessed and, of course, the ice cream man. The baby's power may have disrupted their telepathy.