It's kind of hard to tell from the pic, but it looks like there's a significant difference in depth of about 1/2 an inch. Once you scrape off any excess gunk, you'll basically be doing what's called a skim coat over the lower area. Plenty of videos around to help. Marshalltown makes something called a squeegee trowel that's beginner-friendly and will really help you get an even surface. You'll just have to sand, prime it, re-spackle any bad spots that appear, and prime again before you paint. Use actual primer instead of the primer+paint.

That's way too much of a depth difference to just try and blend it together. It would look like shit. You have two options: 1) Fill in the lower area with lightweight joint compound and smooth it out to match the wall or 2) Replace the drywall. I'd just replace the drywall if it's in your budget.