Traditional role of the mountain dulcimer.
General mountain dulcimer or music discussions
It's not easy to give quick answers to such questions. Some good info has already been posted to your question, but really I'd suggest doing some reading of books and articles written by both Ralph Lee Smith (such as "Appalachian Dulcimer Traditions") and Jean Ritchie ("Singing Family of the Cumberlands"). Those two books in particular are enjoyable reading and filled with descriptions of how mtn dulcimers were played and built before the 1960s 'revival'. Reading books and articles on mtn dulcimer history, and on early American folk music history in general are a wonderfully enriching way to learn all that is currently known, without trying to limit it to a few sentences. I remember almost 25 years ago, curling up in a big chair to read Jean's story of her childhood and her musical Kentucky mountain family, loving how every page swept me into another place and time.