This previous answer to this same question by u/PangeranDipanagara is still by and far a gold standard for the sort of responses we hope to expect from r/AskHistorians. In it, you'll find answers for why Indonesian rulers initially converted, why their citizens followed, overviews of the region, an overview of the several faiths in the region, a capsule on the uniqueness of Bali to the area, and more. The response itself is written by someone well-versed in the field, is well-written (illustrative and logical in its sweep, and engrossing in its details - the story of the first Sufi priests in the area comparing the faith to a coconut is something to marvel), and of course, meticulously well-cited. Finally, located within this point of the text (under the heading 'Preliminary Notes'), is commentary on the specific sentiment behind your question that I had shared before reading this response which, as with the best historical writing, will leave you feeling your previous ignorance lashed away.

The best compliment I can give for it within the realm of the sub is that you couldn't possibly answer this same question without also having to address u/PangeranDipanagara's response and the points that it brings it up. I know that those of us coming in from other subs can grow impatient by the seeming stiffling of opinions that the moderators do. However, by keeping clear the sub's space and responses of the shorter posts, it allows room for this sort of historical discourse to develop, wherein previous responses from weeks, even months and years past, are in fact the points where the sub's discourse last leave off and where posts of depth can pick right back up.

In writing this, I am restricting myself to describing the religious situation in Java. I also want to make note that the religious practice during medieval Indonesia is called Hindu-Buddhism. The term 'Buddhism' alone is very rarely mentioned in medieval Indonesian historiography without being accompanied by the preceding 'Hindu'. As such, I will attempt to prove the existence of syncretism between these two faiths in Majapahit-era Java (1293 to circa 1500).

There is a bit of a poem from a text composed by a Majapahit scribe which reads:

It is said that Buddha and Siva are different in form

They are indeed different but how do we know their difference in appearance

The teachings Buddha and Siva taught are different too

They are indeed different but they are in essence one, (but) there is no mixture of dharma

^~ ^Kakawin ^Sutasoma, ^Mpu ^Tantular

Pure Buddhism and pure Hinduism are not the case of Majapahit’s religious tradition, as there is no pure Islam in Demak’s, Mataram’s, Yogyakarta’s and Surakarta’s religious traditions. The religions coming from the foreign lands met local traditions, doctrine and theology accommodate local cultures leading to a unique blending. The tradition of syncretism was definitely present not only in and after the period PangeranDipanagara wrote about, it also went even further back.

Here's another example of the blending of religious themes from the same poem:

Not long after that Kala becomes

Hyang Puspati due to its successful deep contemplation (topadhara)

King Ratnakanda becomes a guardian of Buddha in Jinalaya

He is no longer rakshasa (evil giant) in appearance, as a result of Bhatara Buddha’s blessing

So that he is so devoted to him and in the service of Bhatara Gautama.

The conversion of an enemy into a friend and disciple is also a common motif found in the later Javanese Islamic narratives. Centuries later, there exist a similar legend told about Sunan Bonang and Kalijaga, who are two of the nine Javanese saints credited for bringing Islam to the island.

Sunan Kalijaga is said to have been a famous leader of a gang of robbers operating in a forest between Demak and Pati, Central Java. One day, Sunan Bonang met Sunan Kalijaga(then called Wahid) while he was walking through the forest. Wahid and his gang attempted to take Sunan Bonang’s possession. However, Bonang chided Wahid and performed a miracle, turning palm tree fruits into gold. Sahid, who was humbled by this miraculous man, repented from his sinful deed and became an important Islamic leader and saint, venerated throughout Java to this day.

We as modern people tend to have this desire to categorize every single belief systems and brand them as exclusive to each other. Yet, there is a lot of evidence that the Javanese of olden times lacked this desire. They freely take themes, narratives, and elements from the tradition that they ancestors hold and mixing them with their new Muslim belief. This also seems to be the case for the era before Islam took hold.

Now back to Hindu-Buddhism--an excerpt from another Majapahit-era text written to legitimize the contemporary ruler Hayam Wuruk:

O my praise and worship from a humble man to the feet of the Protector of the universe Siva-Buddha Janma-Bhatara who is always tranquil in contemplation Sri Prawatanata, Protector of the poor, king of kings in the world Dewa-Bhatara, imaginary above imagination, but is present on earth

^~Negara ^Kertagama, ^Mpu ^Prapanca

The king in the old Majapahit concept is the representation and reincarnation of God Siva-Buddha. Unlike Sutasoma which adapts Buddha's spiritual adventure into Majapahit’s context, Kertagama presents local historical figures and characters. However, the teachings and morality of the two texts remain Buddhist and Hindu, particularly the Buddha-Siva syncretism. The work promotes not only tolerance and understanding to each other but amalgamation of the two. In this vein, seeds of pluralism, by mean of syncretism, can be discovered.

A lengthier excerpt from later in the same body of text:

Far from arrogance and negligent, the king are both alerted and wise and he understands all administration since Kali time. He practices the religion of Buddha and contemplation, following forefathers…(chapter 42.3)

…The king was devoted to the foot of Sakyamuni, upholding Pancasila, with its practices, holding rites Gelaran Jina known as Jnyanabadreswara. Mastering philosophy, grammar, and other religious knowledge (chapter 43.2)

He devoured all knowledge of spirituality, first of all,he delved into tantra Subhuti, understood by heart, with worship (puja), contemplation (yoga and samadhi), for the sake of the salvation of the kingdom. Avoiding sorcery, but fulfilling the common people’s prosperity (chapter 43.3)

^~Negara ^Kertagama, ^Mpu ^Prapanca

There, we can see more clearly that the Majapahit era Javanese does not consider Hinduism and Buddhism to be separate. Rather, they mixed-and matched aspects from the two religions, creating a syncretic faith unlike what we can find in India.

When we are discussing Buddhism in medieval Java, we also discuss Hinduism, and vice-versa--We can't separate the two. As for discussing what happened to Hindu-Buddhism in the later era, I have to defer to the PangeranDipanagara's post.

---

Source: Unearthing Nusantara's Concept of Religious Pluralism: Harmonization and Syncretism in Hindu-Buddhist and Islamic Classical Text