Blackwood turned into one of the creatures
Creatures living in the basement transformed Blackwood just like one of them. The unique thing that happens is that they do not accept the tooth; instead, he chooses to grab him inside and change it into one of them.
Blackwood is the giant creature
Once Blackwood converts into one of them, he becomes the gigantic creature. Those unearthly creatures ask for human life when they come to the surface to turn into one of their own kind, and they prefer a child.
The creatures wanted to transform Sally
The creatures kept looking at sally most of the time as they aspired to transform her into one of them.
Sally killed Blackwood
You might not want to hear this, but the truth is that at the end of the movie, the bug creature kills Lord Blackwood. (See Annabelle: Creation (2017) Explained)
Kim was taken instead of Sally
As these creatures always prefer taking a child, so they caught Kim instead of Sally. They required a human child, and for them, Kim became an easy target, so they chose to take Kim instead of sally.
Kim was changed into a creature
As the creatures took Kim, they turned her just like them. At the end of the movie, you can also listen to Kim asking the creatures to hide until the humans disremember what happened. (See The Ninth Gate (1999) Movie Explained)
Kim is no longer herself
Sadly, once Kim’s transformation is done, she is no longer herself. As in the end, she convinces the creatures to hide and tell them they have a lot of time until new humans show up. In the future, Kim would also be seen as haunting new humans when they come.