The title itself is a kind of euphemism, compared to how earlier generations might have titled such a story. Consider The Haunting of Katie, Terror on Video, Demonic Possession or other possibilities. The paradox of "paranormal" is that it seems intended to normalize the phenomena portrayed in Oran Peli's venture into the "found footage" genre. In that sense, "Paranormal Activity" is an ironic and thematically appropriate title, just as "found footage" is the appropriate approach to the story Peli tells. The footage is the male protagonist Micah's attempt to quantify and thus manage the increasingly severe noises and movements in the home he shares with his girlfriend Katie. Micah (pronounced "Meeka") is a DIY ghost hunter. He's got the video equipment and the gear to record and isolate peculiar sounds. Dumb as he is in horror-movie terms, he represents modern-day empirical rationalism. He's a man of the age of the "Ghost Hunters" TV show and all its rivals, imitators and rip-offs, but his half-assed pursuit of knowledge is a flight from knowledge at the same time. He can't deny that strange stuff is happening in his house, but he stubbornly refuses to recognize it for what it is. He can acknowledge weird shit and finally want to flee from it, but he seems incapable of acknowledging evil or prior knowledge of evil. He reluctantly welcomes a psychic but refuses to consult a demonologist and ignores Katie's warnings not to mess with ... whatever it is ... by trying to film it or contact it with a borrowed Ouija board. Is Peli trying to say something about all the real-life ghost hunters? I doubt it, unless he believes in demons himself. It's more likely that a natural story idea occurred to him and he had the minimal means to put it on film, and the rest is pop-culture history.
Paranormal Activity worked for me on an intellectual level instead of a visceral one. Despite the gimmick, it's really a classic horror story of a certain kind in which a fool gets his comeuppance. On that level it was reasonably well thought out. As for the extraordinary claims about how frightening it is, maybe you had to be in the right place at the right time. To get the scare effect you probably have to be in a crowded theater where the screaming crowd serves as a horror multiplier. Peli's technique makes it impossible for him to set up his scare moments with traditional movie gimmickry. The camera just stares out at a couple in bed and there's no music to create a mood. Some people may feel that these self-imposed limitations make the spook scenes more horrific because they may look more real, but some of the biggest scare moments come across as little more than dead air in the privacy of home, It's as if you need other people screaming as the punctuation that proves that something really scary happens.
The gimmick is also abused to pad the film in spots. Several times we have overnight scenes in which something paranormal happens while our couple is sleeping, seen only by the video camera. Then on the next morning we'll see Micah and Katie watch the same footage and react to it. It may be that Peli wants to establish the objective reality of events, while the morning-after scenes are meant mainly to illustrate Katie's growing panic or Micah's obtuseness. But all of that could have been established in the morning-after scenes, since the video images are objective reality whether we see them "live" or on Micah's laptop. The main object seems to have been to get the film safely to releasable feature length.
Now that I've criticized some of the gimmickry let me reiterate that I think the film succeeds thanks to the writing and the acting, the stars being persuasive in a way that artless newcomers often can be. People who judge the film by whether it deserved to be a blockbuster, or those who felt manipulated by the marketing campaign, shouldn't lose sight of the genuine quality in the film's concept. At the same time, it's fair to say that the hype was excessive in portraying Paranormal Activity as more than it is. What it is is a mild satire of modern culture, and the fact that it needed such hype to get our attention probably tells us something more about our culture.