In the middle of the 20th century the Supreme Court’s interpretation of the religion clauses changed dramatically. In the 1940s, the Court determined in Cantwell v. Connecticut that the Free Exercise Clause applied to the states. That is, just like the federal government, a state government could not restrict religious freedom. The Supreme Court achieved this enormous expansion of the Religion Clauses by applying the (relatively) new 14th Amendment, which had been enacted in 1867 after the Civil War.
Since most governmental activity occurs at the state level, the new limits placed upon the states by incorporation of the religion clauses led to numerous court cases in the 20th and 21st centuries. As you will see, these cases are confusing and sometimes conflicting, reflecting both the inherent difficulty of finding the proper relation of church and state, and the fact that, like the Founding generation, later generations of Americans have not been able to come to a consensus about what the religion clauses mean.