Kagbeni is situated in the valley of the Kali Gandaki, This river is one of three who cross the Himalayas. The Kali Gandaki was one of the major trading routes between Tibet and India. The traders brought the famous salt from Tibet and barley, spices and clothes from India. After the Chinese invasion in Tibet the trade came to an halt and many of the rich villages lost their revenue and later many people. Nowadays, there is again a some trade, but also now the income from Tourism.
Kagbeni is just a 2 hour side trek from the shortest route from Muktinath to Jomsom.