In Indo-European polytheism, there are really only two differences between deities and humans. As with the living fire and the flowing waters mentioned before, these two key differences can be traced back to Proto-Indo-European words that describe humans and the divine differently:
|Location||*dhghmónio- - "Terrestrial"||*deiuó- - "Celestial"|
|Relation to Death||*mrtó- - "Affected by Death"||*n-mrto- - "Not Affected by Death"|
In the most simple conception of the difference between diety and human is that we humans are terrestrial things, living here on the earth and rarely rising above it, and deities are celestial things, living their lives in the heavens (primarily), or in spheres not our own. In addition, while we humans are clearly affected by death, deities are not.
It is really only these two things that appear to truly separate us in the minds of the Proto-Indo-Europeans. These beings are not necessarily greater than us in terms of power, nor are they more knowing or wise than we are, strictly speaking. They are, simply put, undying and celestial in nature, whereas we are not. In all other aspects, it appears that we are not much different than the deities we interact with.
With this implication (that there are no other major differences between humans and deities), we can reasonably expect that relationships with these beings will be similar to (if not identical to) the relationships that we have with other humans. Thus, "sacrifice" (reciprocal gift giving) and "veneration" (the showing of love) are one in the same, a PIE word *Hiag-. . . a single term that illustrates both actions as a single action (the use of a single word for both concepts indicates that "sacrifice" and "veneration" are separated primarily for the modern thinker, not for the ancient one).
The most common form of this veneration and sacrifice is the shared meal, a solemn dinner given to the gods. In this meal, the deities are invited in, asked to sit in places prepared for them. They are given food specially prepared for them and served the best drinks. Often, the dinner entertainment is known to have involved praise poems (something I'd like our Grove to get back to one day), and all these favors are returned by the granting of blessings, often in the form of glory, victory, rain, cows, etc.
As we do ritual, we are engaging in this basic format: *ghos-ti-, the guest-host relationship, is at the forefront, and there is an exchange of gifts that occurs, as is proper in human relationships. In the end, veneration leads to prosperity, because those who love one another will also share their wealth and fortunes freely with one another.
Incidentally, this lends some interesting thoughts into why the "death of the gods" appears at the "end of the world" (e.g. Ragnarok, etc.). Why do the gods die in these stories? How is it that individuals "unaffected by death" die? What does this mean in the sheme of mythology? I'm reasonably sure that there's not a grand, perfect answer to these questions, but it seems to me that much of it has to do with the fact that if the world is coming apart, then our assumptions about the reality of these deities must also come apart: those that never died, will die, and those that reside in the heavens must fall to earth.