Tradition is the process by which something that was worth doing was thought worth doing again. And again and again. So there is a continuity and connection with the past because of the repetition. But tradition in this sense is mixed with folk to mean traditions of the common people.
Traditional music has the sense of history and being part of the oral tradition. It is passed on, but never kept. It evolves by each generation who bring to it something different and something new. As an evolving entity, it incorporates influences, styles and perceptions along the way. Contemporary instruments change; electric instruments which once didn't exist and then became avant garde are now commonplace and have an accepted place in traditional music just as the PA system is considered de rigeur, or the bouzouki, once a Greek form of lute is now at home in Irish Music.
What is traditional about traditional music? It is the tunes, the rhythms and the songs in their most basic form. It is almost as if there exists a meta-tune or meta-song which is the template for rich overlays of arrangement, instrumentation, ornamentation, harmonies and tempos. The meta-tune is there and recognisable but it almost certainly isn't the same as was played 100 years ago.
Traditional is not the same as tradition. Traditional music is only similar in that the music is passed down through the generations but the music reflects something much more fundamental than a tradition.
Traditional Music is about identity and ethnicity and is irrevocably tied to Dance. The Rhythms and Modes are distinctive so that placing musical origins is relatively easy. There is no mistaking Klezmer or East European or Irish or Breton music for example.
If we examine each areas' musical tradition, it really is about dance rhythms and the musical mode. Klezmer has a number of modes and is typically played for celebrations such as weddings. Irish music with predominantly Jigs and Reels is played in not only major and minor keys but also in Mixolydian and Dorian Modes. Breton dances are Circle Dances, Boureés and Mazurkas (although originating from further east).
The instruments are also distinctive. The Breton Bombarde, Hurdy Gurdy and Cornemuse against the now ubiquitous Clarinet for Klezmer and the array of instruments such as Uilleann Pipes, Fiddle, Penny Whistle and Bodhran in Irish music.