While there are two distinct religions, they coincide fairly well. Here's the space about Religion and such.
Religion in the Empire is a complicated affair. There is no single deity who rules above a pantheon of gods, nor is there a clear division between the different elements of the Realm of Gods. Instead, there are two distinctly different philosophies of religion, bound together by an imperial edict long ago into a jumbled theology.
The original religions of the Time Before are lost, but after Katzu assumed the throne of the Empire there came the Worship of the Kami. The peasants of that time were completely at the mercy of the elements, and often looked to potent deities for guidance and mercy. Unlike other superstitions, however, the Kami are very real entities from Tengoku that occasionally found reason to intercede in mortal affairs. The peasants were quick to worship them.
Soon after the the ascension of the third emperor, however, a new religion appeared. Led by a prophet known only as Nonemu (lit. "no name"), it was far more philosophical than the worship of the Kami, and the study of Nonemu's teachings soon became very popular. Those who dedicated themselves to the Way to Enlightenment formed several monastic sects, collectively becoming known as Waywalkers or Walkers of the Way.
Both religions continued for decades in the Empire, with occasional theological disagreements erupting into skirmishes between families or clans. To prevent such conflicts from becoming too detrimental, the Emperor declared that the Way and the worship of the Kami would be united into a single theology. Though oddly matched, the two have flourished together for centuries.
In the Empire, a character's religion is merely a reflection of what aspect of the Empire's theology he adheres to most strongly.
Even the most stought followers of the Way pay homage to the kami. Most citizens who revere the kami are industrious individuals, seeking to emulate their chosen patron in words and deeds. The worship of the kami is detailed more in the sections below.
The Way is more a philosophy than a religion, more of a way (see what I did there?) of thought than a theological standpoint. Students of Nonemu's teachings seek enlightenment of the spirit through the perfection and unification of the body, mind, and soul. Devotees of this philosophy are contemplative and reserved, choosing to rely upon wisdom rather than succumbing to emotion or the heat of the moment.
Most monks and sohei are followers of the Way, in one way or another. While there are often different schools of though about different actions, they travel around the Empire, preaching the wisdom of the Way. Those monks that are truly enlightened are fearsome sights to behold. In the past, they had a large amount of influence, waging war from their mountain temples, but in recent years they have been subdued. They still remember their former glory, and many wish to reclaim it, in some way or another.
The worship of the kami is the oldest facet of the Empire's religion, having been practiced from the time of the Great War onward. This originates from the lost capital of Kami-no-Toshi. The exact form of worship was actually called the way of the gods, and referred the many kami as Yaoyorozu-no-kami, which refers to how there are literally an infinite amount of kami. These include the powerful Amaterasu and Tsukuyomi, the seven gods, and the other kami that inhabit every rock, river and grove in the Empire.
While there are commonly eight kami placed above the others, there are many other named kami, and thousands that have no name, or at least an name that is unknown. Amaterasu and Tsukuyomi are widely regarded as the most powerful kami, and they occasionally take an active interest in the mortal realm. It is excepted, however, that they only intervene extremely rarely and when it suits them to. Worshipping the kami is a show of respect rather than a hope for intercession.
Because of their importance, the kami are worshipped throughout the Empire. Cities of any significant size contain temples to them, most with monks that maintain and care for the shrine. This is because of the constant worshippers the shrines receive (both from peasants and samurai) on a daily basis. Perhaps surprisingly, there is never a shortage of workers to care for the temple, as it is considered a great show of respect and good luck for the individual in question.
Images of the kami are drawn in two different styles. When all is well and happiness abounds, the citizens pay homage to images of the kami in their peaceful aspects, reclining upon a pillow or perhaps streaking across the sky in a golden chariot. When there is strife, suffering, or discord, however, they are represented in their wrathful aspects. Wrathful kami are typically depicted with black skin and blazing red eyes, often wielding gigantic, deadly weapons.