People in the past did celebrated with friends and family, but it also involved drinking and music and general partying. Kids were generally present until they were sent to sleep.
There were taverns and pubs where people went to drink and be noisy too.
That is what I got from my grandparents and parents. And when I read memoirs (from wwii and such), people mentioned very party like a activities too.
Also, the tavern can only be a thing in a society that has cash/money, which also makes me think that a place like Western Europe would have the upper hand on this. Even going in the second part of the 20th century my grandparents’ village was trying to avoid money/cash as much as possible, work-days were often-times paid in other work-days, so to speak, i.e. “I help you out with that hay thing for three days you help me out in return with two days carring wood out of the forrest” or something like that.
Big parties did indeed also happen at weddings and after burials, the latter ones are called “parastas” and I think it has been directly taken from the antique Greco-Roman tradition.
Not to mention weddings, coming-of-age celebrations, and funerals/wakes, which date back well into prehistory.
Every village big enough to have church has also tavern. Usually close to each other. People drunk a lot, actually. They were poor a lot, but alcoholism was a thing and big social issue.
Paying in work or work for work was a think exactly as you described.
If anything, current western norms are significantly less social. People visit each other less often. You don't have drinking and talking till late while kids run around never at all. Especially as you get older. The way we live forces us isolate in middle age and lonely in old age.
Parties are also a little over-hyped, even a social construct, I would say (writing it down it actually sounds tautological).
On my country's local sub-reddit someone was asking people older than him how did they spend New Year's Eve parties in the past, which reminded me of the New Year's Days I used to spend with my grandparents in the countryside, in a village close to the Carpathians. There were no New Year's Eve parties in that village, or in the villages surrounding it, for that matter, young, unmarried, people would usually congregate on Saturday's evenings for a "village party" so that the boys would find girls to marry and that was pretty much it, once you were married and especially once you had kids of course that parties were not a thing anymore for you (why would have gone there? you were already married).
A little on the conspiracy-oriented side I would say that modern parties have been presented to us as the way we now know them ("you have to be there! you have to be seen as a likeable person! you have to talk and make conversation! you have to small almost at all times!") out of consumerist reasons, I would even that most of this whole "modern socialising thing" is backed-up by consumerist reasons.