Basically, the lares were household and neighborhood gods that the Romans themselves didn't understand well. Two contemporary Roman writers give six possibilities for what the lares might be, with both of them admitting them don't know which description of the lares is correct.

The lares were widely worshipped all the same, with individual households honoring them at the hearth, and both rural and urban neighborhoods typically having a small shrine to the lares at each crossroad, where yearly sacrifices were made and regular minor offerings were presented for the favor of the lares. The lares, despite this ambiguity of what they actually were, were also widely depicted in religious murals, with surprisingly consistent themes and appearance (twin young figures, non-formal dress, clean-shaven, dancing), and seem to have popped up wherever Roman populations were, regardless of whether the city itself was Roman-majority, suggesting that the lares were a core part of Roman religion despite the fact that even educated Roman writers did not necessarily understand what they were.

The book I recently read posits that the lares were gods of place, essentially one of the (many) holdovers from ancient, pre-Greek-influence Roman religio that has an almost animistic conception of the world. Noted is that not only did every household (including rural farming households) have individual lares, but that the lares at each crossroads were separate not only from other neighborhood lares, but also from the lares of each household in the neighborhood, and that early in Roman seafaring, sacrifices were made to lares of the sea.

The book also compares and contrasts them to the Manes/di parentes, the ancestral spirits of the family; to the genius of individuals; and to the genius loci of individual places. The lares were divine and not derived from mortals, and so were not ancestor spirits; the lares persisted beyond any individual, so they were not individual genius; and the genius loci were associated strongly with the land/region itself (though often paired with depictions of the lares), while the lares were associated with human settlement, rather than being autochthonous.