Why does nearly every Bollywood movie seem to incorporate singing and dancing?

 

Yet it can be further dissected, as some of the answers above point out.

Culture and Tradition: Drama/Nautanki/Jatra and even dance performances like laavaniwas an intrinsic part of entertainment even in the interiors. This population, the non-urban population, still forms a huge part of a mainstream movie's audience and they look forward to having a good time with the song and dance sequences.


Business: A huge chunk of revenues for a film is said to come from music album sales. This is an amazing revelation considering how deep-rooted piracy is.

A mode of expression: In the earlier days of cinema in India, song and dance was used to express emotions that prose+acting couldn't. From national integration to lust and of course, romance were conveyed using beautiful lyrics set to soul-stirring melodies.

Escapism: A lot of the audience wants an escape from their lives when they go to a cinema hall instead of see someone else's reality. Song and dance sequences make a good means to reach that end.

Yet somewhere rooted in reality: A lot of Indian festivals and wedding processes have singing and dancing as an inclusive part of the rituals. It's not just the newer forms of wedding eve, sangeet (song and dance) parties or Ganpati festival  (Celebration of the elephant god's birthday). Weddings in earlier days, would have women of the village get together and sing from 15-20 days before the day. Navratra is a 9-day dance festival of western state, Gujarat. Each state and many sub-divisions of a state has its own local form of folk dance.