I got this question from an Atheist friend recently. I thought it was a really good question and worth an official response.
Question: “You don't believe in Zeus, I’m assuming. Why do you think he was created, why did people believe in him, and why don't they anymore?”
Answer: Actually, I do believe in Zeus. So you assume incorrectly. Let me explain.
“the sacrifices of pagans are offered to demons” (1 Corinthians 10:20)
What he's saying here is that though the worshipers of the pantheon claim to be sacrificing and praying to gods, they are actually praying and sacrificing to demons whether they know or not. In a second letter to the same audience Paul called Satan:
“The god of this age” (2 Corinthians 4:4)
As to why people believed in gods, I’m convinced there was reasonable evidence that "gods existed." However, those that posed as gods were actually demons seeking worship from humans. It’s in that sense that I do believe in Zeus and the other gods. I just think they were liars about their true identity. After all, Jesus said this about the most famous fallen angel,
"the devil... was a murderer from the beginning, not holding to the truth, for there is no truth in him. When he lies, he speaks his native language, for he is a liar and the father of lies." (John 8:44)
About this Paul said,
"Satan himself masquerades as an angel of light" (2 Corinthians 11:14)
So what I imagine was happing was demons had some ability to reveal themselves to humanity, and they revealed themselves as powerful beings worthy of worship. John, who was dictating Jesus' words to a church at Pergamos said,
“I know where you live—where Satan has his throne… where Satan lives.” (Revelation 2:13)
Twice he identifies Pergamos as a place where Satan is present, lives, and has a throne. What is he talking about? For that, we’d have to know a little history. John Barry notes:
“The throne of Satan [is] Probably a reference to the altar to Zeus, located at the top of Pergamum’s acropolis, and which hailed him as savior. 
Craig Keener says:
It was a “famous giant altar of Zeus (120 by 112 feet) overlook[ing] the city on its citadel.” 
So it seems that Zeus is equated with Satan, assuming that’s what Jesus meant by “Satan’s throne.” What’s more, the mythological gods seemed hungry for worship. They required a lot of their worshipers. Sacrifices and lavish praise were required if the gods were to do anything. This seems to fit with what we know about Satan in his interactions with Jesus. Satan makes this offer to Jesus:
“All this I will give you,” [the kingdoms of the Earth] he said, “if you will bow down and worship me.” (Matthew 4:9)
I’d even add that the mythological gods of various ancient cultures demonstrated similar characteristics to demons. It’s widely known that the mythological gods could sometimes act nobly but often demonstrated more base and depraved appetites. The gods of pagan mythology were not moral role models. In fact, they were purported to act in ways that would not make them good citizens. Most of mythology was violent and pornographic. They were as likely to use their power to take advantage of and abuse human worshipers as they were to help. This fits with what we know of demonic intentions as well. One of Jesus’ most famous followers, Peter, once said:
“Be alert and of sober mind. Your enemy the devil prowls around like a roaring lion looking for someone to devour.” (1 Peter 5:8)
You may think, Is it reasonable to believe that demons throughout the world could be working together in a unified way to gain worship? Sure. Jesus said they stand unified together:
“Every kingdom divided against itself will be ruined… If Satan drives out Satan, he is divided against himself. How then can his kingdom stand?” (Matthew 12:26)
What’s more, there is evidence in the Bible that certain demons were in charge of specific areas. In a conversation with the prophet Daniel, the angel Gabriel explains to him why it took him so long to arrive. He says:
“But the prince of the Persian kingdom resisted me twenty-one days. Then Michael, one of the chief princes, came to help me, because I was detained there with the king of Persia.” (Daniel 10:13)
The “prince of the Persian kingdom” is a demon who held some authority over the Persian kingdom. What that role entailed we don’t know, but part of his duties apparently included warding off and fighting against intruders like the angel Gabriel. He fought against Gabriel and even stopped his advance for 21 days. Then Michael, one of the chief angels (called princes) came to his rescue. What this tells us is that demons had regions that they were responsible for and had jurisdiction and authority over.
That leads me to believe the following: when a person worshiped “Zeus” at a temple in Corinth, they were not necessarily worshiping the same demon as they would be if they traveled to Athens and worshiped in the Athenian temple of Zeus. I put this idea together from the above verse and the way that Greek pantheism worked. In a lecture series on Greek Religion, Dr. Robert Garland  pointed out that when someone offered sacrifices in Greek religion, he was required to identify not only which specific god but also a specific temple to which that god belonged in order to make an effective request.
So one could not simply make a sacrifice and pray, “Zeus, bring rain for my crops.” Instead, they would be expected to make a sacrifice and be specific who they are praying to. They would say something more like this, “Zeus, who has a temple in Corinth, bring rains.” Or “Zeus who has a temple in Athens…”  We generally think of Zeus as a single entity who is worshiped throughout the world. Garland explains that that is not really how the ancients saw it.
I believe this fits in with what we know about demonic forces. Demons are not omnipresent, as demonstrated by many of the verses already discussed. Instead, demons could only be in one place at one time. Therefore, if someone prayed to Zeus in Athens, and someone was praying to Zeus in Corinth at the same time, they were likely speaking to two different demons who represented themselves as the chief god of the region.
So that’s what I mean when I say I believe in Zeus and the other gods. I’m convinced that every entity from Baal of Peor to Zeus of Corinth were actually demons masquerading as gods. To me, this makes much more sense than just saying, “they didn’t exist.” I’m convinced that they did exist and had some power to reveal themselves and demonstrate authority in the physical realm. They just happened to be lying about their true identity. The second part of your question was: Why don’t people believe in the pantheistic gods anymore.
Western people don’t believe in them because of Jesus. Monotheism offered a better explanation of the world than pantheism did. Jesus was the chief champion of monotheism and set the stage for a huge swath of the world to move toward monotheism. I would add, though, that a portion of the world still engages in polytheistic idol worship. So it’s not completely dead. In different regions and times, the names of gods may vary, but the concept still applies.
___  John D. Barry et al., Faithlife Study Bible (Bellingham, WA: Lexham Press, 2012, 2016), Re 2:13.  Craig S. Keener, The IVP Bible Background Commentary: New Testament (Downers Grove, IL: InterVarsity Press, 1993), Re 2:13.  Robert Garland, The Other Side Of History: Daily Life In The Ancient World (Great Courses)