It looks like a country fair anywhere in Britain or the United States, with familiar-looking colorful booths, tents and pavilions sprawled across a muddy field near Swansea in south Wales. But many among the English-speaking majority in Wales find the sights and sounds of the annual Welsh national Eisteddfod strange to their eyes and ears.

Everything spoken and written on the Eisteddfod field is in the ancient Celtic language of Welsh: casual conversations among families leaving their cars in the parking lot, songs and poetry performed on the pavilion stages, books on all subjects for all ages sold by Welsh publishers, pamphlets and brochures offered by special-interest groups across the political spectrum signs on food stands and publicconveniences.

"It's a peculiar institution, isn't it," observed an English-speaking Welsh newspaper editor in Cardiff with a condescending smile.

But for the one Welsh family in five that still speaks and reads Welsh, and believes it to be the key to their cultural identity and pride, the Eisteddford is the most important event of the year. Based on similar festivals dating back to medieval times, the Eisteddfod has been held annually in different parts of Wales for more than a century, and is again becoming increasingly popular. Its purpose is to preserve the Welsh language and culture through music and literary competitions for children and adults, language materials, traditional crafts and political propaganda.

The darker side of the struggle to keep alive the flame of the ancient Welch nation also has been in evidence. Militants who want the government to create an all-Welch television channel destroyed a commercial television display at the Eisteddfod, and lay down in the path of the car carrying Prime Minister Margaret Thatcher's secretary of state for Wales, Nicholas Edwards.

Other activists, most of them members of the militant Welsh Language Society, recently have bombed and invaded television transmitters in Wales and England. About 1,500 Welsh-speaking families have refused to pay the required television license fees that finance the BBC in Britian. Nearly 70 protesters have been prosecuted, and five have been sent to jail.

Both Conservative and Labor British governments had promised to create an all-Welsh fourth television channel instead of scattering Welsh-language programs on the present three channels in Wales, which inconveniences and irritates both Welsh-speaking and English-speaking viewers among the population of 2.7 million. But when the Thatcher government announced plans for a nationwide fourth television channel, it reneged on its pledge to make it all-Welsh in Wales because of the cost.

This touched off the television transmitter sabotage, and demonstrations by a surprising cross section of Welsh-language activists, includig young and old people, college students, prominent academics and figures in the arts. Gwynfor Evans -- the revered 67-year-old founder and leader of the Plaid Cymru, the Welsh Nationalist Party, for 35 years and a former member of the British Parliament -- has vowed to begin a fast in October if the Thatcher government fails to respond to this new pressure."

"I do not intent to kill myself," Evans said in an appearnace at the Eisteddfod. "I intend to last as long as I can and hope that the government will meet our just demands before my fast begins."

"Television, as the government knows," Evans contended, "is the medium which is doing the most injury to the [Welsh] language. A big viewing, public could be built up for a regular service on the fourth channel."

We want a television service with an identity of its own for the Welsh people," added Plaid Cymru's young general secretary, Dafydd Williams. "We want to reach children and have Welsh programs on during prime-time hours in the evening. We want a clearly identified channel for Welsh programs to avoid irritating people who don't understand Welsh."

The Celts of Wales, like those in In Scotland and Ireland, were never completely subdued by the waves of invaders over the centuries. Finally, Wales was formally united with England in the 16th century. the Welsh managed to keep their Celtic language in widespread daily use, unlike the Scots or Irish, the Cornish in southwest England or the Manx on the Isle of Man between Britain and Ireland.

Despite having been part of Britain for centuries, the people of the once well-isolated hills and valleys of Wales have clung to their separate identity. Even English-speaking Welsh residents, who voted overwhelmingly in a refrendum last year against partial home rule for Wales because of their antipathy toward Welsh language separatism, have a fierce local pride.

They took to their close-knit communities, world-famous choral singing, winning rubgy football teams, and pastoral green countryside. It is dotted with preserved castles and Roman ruins from centuries of border skirmishes between Welch Celts and Roman Legions, Norman invaders and English armies.

Nearly 90 percent of the population spoke Welsh until the early 19th century, when English bureaucrats began stamping out the use of the language in Welsh schools. Now the pendulum is swinging the other way, and the national government in London has been forced by pressure from Welsh language activists to pay for bilingual signs on roads and government buildings throughout the country and Welsh-language education wherever the local school authorities want it.

Beyond the language controversy, there is what David Jenkins, deputy secretary of the Welsh Trades Union Congress, calls an "undercurrent of Welsh nationalism stemming from a kind of English imperialism here. Industrial managers in Wales have tended to be outsiders because little of the industry is locally owned, while the workers are all Welsh."

Decisions about the future of Welsh industries and the employment of Welsh workers are made largely in board rooms in London, New York and even Tokyo rather than in Cardiff, Newport or Swansea. "This exacerbatos division between 'us' and 'them,'" Jenkins said.

Another irritant is the increasing movement of better-off English families into the Welsh-speaking heartland in the hill and mountain villages of middle and north Wales, where they are moving to take advantage of bargain home prices, or are buying second home for summer use. Nearly 30 empty summer homes owned by English families in scattered areas of Wales have been burned down by Welsh militants this year, and a police dragnet to find the culprits has spread resentment among known activists singled out for questioning.

"We oppose violence that potentially endangers life," said Dafydd Williams of Plaid Cymru, "but we understand why some people are resorting to it because this is also a very serious problem. The English are threatening to swamp the Welsh identity of certain areas."

His Welsh nationalists want to make Wales a separate country that could establish Welsh as its official language, erect immigration barriers to keep out unwanted intruders, and try to exploit its coal, seaports and eager Welsh labor for the sole benefit of Wales. This is much further than the vast majority of Welsh want to go, which is why even limited home rule offered Wales by the previous Labor government was soundly beaten in last year's referendum.

But the increasing economic problem and unemployment in Wales and the refusal of the Thatcher's government to keep its promise of an all-Welsh television channel appear to be increasing Welsh alienation from London. "Welsh cultural nationalism feels cheated," the London Times newspaper declared recently. "It has reason to feel cheated. It will accordingly be more difficult to accommodate."