Initially, it makes perfect sense. India is a vast country after all. However, when you come to think of it, its film industry disproportionate to its size. Bollywood dominates the Middle East and the former USSR and all throughout south and Central Asia and even into Africa. India similarly is an impoverished, parochial country isolated by British colonization, but even under the British, Bollywood managed to start itself off. China, an even larger country than India and surely significantly wealthier and coming from a similar place, doesn't have anything approaching that kind of influence in its movie industry. Why has Bollywood captivated us so much?
Follow-up question: Bollywood movies with the (stereo)typical dancing and singing remind me a lot of 1940's Hollywood cinema. Is this a coincidence or is this when the Indian film industry took shape?