Traditional role of the mountain dulcimer.
General mountain dulcimer or music discussions
It seems to me that the inquiry of "what the mountain dulcimer's role was in the area it came from a hundred odd years ago" is attaching undo importance to the instrument. It is a FOLK INSTRUMENT, something which can be made at home and used to create music.
We might ask the same question about the bones, spoons, shipping crate drums, cigar box fiddles, the washtub base, the monkey stick/Stumph Fiddle, cigar box uke/guitar, and many other musical devices. All of these have enthusiastic contemporary users and builders with forums, etc. and are used in public performances. I think all of them are also commercially produced and sold to a widespread market.
As a parallel to the current interest in the lap dulcimer, look at the cajón (Ca-HOne). It is a wooden box on which you sit and pound. In its modern version it is a Peruvian folk instrument, and you can easily pay $400 for a top grade one through Walmart's on-line shopping. You can find YouTube instruction on how to play it, ensembles, and get lessons at many music schools.
Enjoy your dulcimer, I enjoy my assortment along with other instruments. By all means, study its history. But we shouldn't make it into something of great world-wide importance.