'Manouche' was the term applied to gypsies of northern France and Belgium. Not all Roma, some are Sindi, the group to which Reinhardt belonged.
Gypsies near Paris came there with the music of central and eastern Europe, but the type that provided employment in the bal musette clubs of Paris was partly waltz-based, using the accordeon, guitar, banjo, etc. A distinctive type of dance music, 'musette', developed.
Reinhardt played with these groups. Accordionists like Guerino, Gardoni (with whom Django played before his injury), Murena, guitarists Ferret, Joseph Reinhardt (Django's brother), basists Revira and others were the developers of this musical style. Following Django's recovery from burns, he joined with these groups.

'Jazz manouche', or 'gypsy jazz', developed largely from the new sounds of Django Reinhardt, a truly creative musician, whose work still influences jazz. With Grapelli and others, a new jazz variant was developed that still has followers and many listeners.

The music of Reinhardt, the musicians of his 'Hot Club', was western in instrumental styles and instruments, but added improvisations of a type that were new. The 'gypsy' element, perhaps, the moods and introspection, enters in the solo music of Reinhardt, both singly and as parts interwoven into the fabric of the 'Hot Club' music. Grapelli, not of gypsy origin, picked up on Reinhardt's 'mood music', and is present in their duets.
Reinhardt's solo compositions, such as "Manoir de mes reves" are gems of introspection.

The music of Reinhardt was not folk, but the players who have loved his stylings have gone on to add to Reinhardt's 'gypsy jazz' and so have developed the music into a folk as well as jazz idiom.