Traditional "folk" music is still a very large part of Nepali culture. In a country with very few radios and even fewer televisions, singing and dancing are almost always "live" and constitute a major source of entertainment. Nepalese love any opportunity to watch (or take part in) singing and dancing - such musical activities are a major part of weddings, festivals and extra-curriculum school activities.
It's almost impossible to find Nepali folk music outside of Nepal - the rare "Nepali Music" album sold in the shops is likely to be of a more touristy nature. Other than travelling to Nepal (highly recommended), the best option to get a feel for traditional Nepali music is through this website.