A little history from Wikipedia:
Although the Appalachian dulcimer first appeared in the early 19th century among Scots-Irish immigrant communities in the southern Appalachian Mountains, the instrument has no known precedent in Ireland or Scotland. However, several diatonic fretted zithers exist in Continental Europe that have a strong similarity to the dulcimer. Jean Ritchie and others have speculated the Appalachian dulcimer is related to similar European instruments like the langeleik, scheitholt and épinette des Vosges.
Few true specimens of the mountain dulcimer exist from earlier than about 1880, when J. Edward Thomas of Knott County, Ky began building and selling them. The instrument became used as something of a parlor instrument, as its modest sound volume is best-suited to small home gatherings. But for the first half of the 20th century the mountain dulcimer was rare, with a handful of makers supplying players in scattered pockets of Appalachia. Virtually no audio recordings of the instrument exist from earlier than the late 1930s.
The Appalachian dulcimer achieved a renaissance in the 1950s urban folk music revival in the United States through the work of Jean Ritchie, a Kentucky musician who introduced the instrument to New York City audiences. Meanwhile, the American folk musician Richard Fariña (1937–1966) was also bringing the Appalachian dulcimer to a much wider audience, and by 1965 the instrument was a familiar presence in folk music circles.
One of the most acclaimed folk album's of all time "Blue" by Joni Mitchell also features four original songs written and played on the Mountain Dulcumer. I told you it was a folk music instrument, it's also uniquely American. While playing techniques very, you can play the melody on just one string and strum the others to create a drone, which reflects the Scots-Irish heritage of the instrument. This, of course, makes it perfect for Celtic music as well. It is the Drone in the title of my blog, Strum Pluck & Drone.
Short and sweet, that's a little basic info on the mountain dulcimer.