Farmers' Markets have increased in popularity over the last decade and a half, and at least on the west coast of The United States, it seems like every town has one or two a week. But in gaining popularity, the Farmers' Market has changed what it is: it is neither primarily for farmers, or a market.
A modern farmers' market is usually held in a large, attractive park close to a city center, and usually runs for several hours, often on a weekend. Along with produce, there is usually prepared food from food carts, arts and crafts, informational booths for a variety of causes and events, live music (usually of a folksy or acoustic nature) and sometimes other artistic performances. Although it varies from market to market, most Farmers' Markets are a place for people to socialize and have fun, rather than a place to buy produce.
The appeal of a Farmers' Markets is that in smaller towns, they provide a weekly source of entertainment that might not be available elsewhere. There is also a rather low investment for going to one: someone can drift into a market, eat a burrito, listen to some music, and then leave, which is not the case if they were going to a concert. For many people, Farmers' Markets are replacing shopping malls as an experience that combines shopping with socializing and recreation.
As they have gotten more popular, Farmers' Markets have received some scorn due to the stereotypical nature of their clientèle (educated, young and white) and the almost smug attitude with which the wholesome nature of the event is approached. However, I think that having a place where people can socialize and enjoy art and music outside of the crass consumerism of a shopping mall is, on the whole, a good thing.