"This is what Rebellion Looks Like"
The Church is opposed to the Evil Powers. However it is tolerated because it is (a) very popular and (b) largely ineffective.
The Evil Powers know full well they are outnumbered. If the people of the land united against them they could easily kick out the vampires and liches and devils and faries.
One of the only things that might unite the people like that is destroying the Church.
If you can't beat em then join em. The Evil powers officially recognize the Church and worm their own agents inside.
The Church provides a safe way for any potential rebels to get out their rebellious impulses. They go to church and give long sermons on moral virtue. They decry their evil overlords. They sing booming songs and put their hands in the air like you just don't care. Then afterwards they go home feeling like they have made a difference.
After all that exertion they are less likely to take up arms and tear the nearest Human Processing Facility.
The Church has several sects which spend their time arguing with each other over interpretations of the sacred text rather than kicking the devils back to where they came from. More effort lost.
The Church is an important part of the Evil PR machine. By recognizing the Church, they make themselves seem more balanced and reasonable. You are allowed to decry us and say anything bad you want. Freedom of speech y'all.
It is hard for an oppressed people to swallow "No rebellion in thought or deed will be permitted" without realizing they are oppressed. It is easier to swallow "Some types of rebellion are allowed. See the Church. But other kinds have no place in any civilized society."
This is the case in the real world. Spreading anti-government sentiment is allowed. Peaceful protests are allowed. You are allowed to stand around in a large group, in a place you would not usually stand. But if you stand around for too long or touch the wrong thing you will be arrested for obstructing traffic or damaging private property. Do it too much and the whole group will be attack and/or locked up. Attacking government buildings with a truck and firebombs? No way.