Yes, Indonesia is a Muslim country. Actually it's the most populated Muslim country in the world.
I visited two big islands and one tiny island. Interestingly enough, Bali Island is a mostly buddist island. But the other two are Islamic.
I felt Islam is very intrusive to daily life. On the tiny island, there were two mosques, each has very powerful loudspeakers on the roof towers. The loud chanting woke me up very early every morning. During the day time it occurred several times. I didn't count. I stayed on that tiny island for two weeks. At first I was quite disturbed, but after a few days just got used to the sound.
On the beach, you would see some Muslim women covering themselves from head to legs. But also I met an Indonesian girl who was also a Muslim but she wore bikini. During my stay of one month, I didn't see any women covering their face.
Dispite being ripped off by the money exchanger the first night I arrived at Bali island, my experience in Indonesia was quite good though. :)