Funny and true observation. In fact there's a bunch of diegetic music in the Star Wars movies, including some tracks called "Tatooine Street Music" which I can't find, yet. But from Jabba's Palace and various bars and celebrations (including the Ewoks).
I think the important aspect here is that music itself is diegetic in the Star Wars universe -- they listen to music! So, in a city like Batuu, would there be music? Yes, if there are merchants, bars and restaurants.
As far as the non-diegetic score, I understand the concern they may put the London Symphony Orchestra recordings on blast and walk away. Well, if they do that, shame on them. These musical themes are powerful, and evocative, and helpful. But they need to be arranged in ways that work for the environment and to some extent sound diegetic. These melodies performed on unexpected, vernacular instruments, like
this and
this can work subliminally and not disrupt the immersion as much as feared. It doesn't need to be symphony. Let's hope they take their time and are very deliberate (which, I believe they were in crafting the music for the new Haunted Mansion queue, right?).