Answering only your final question: the smoke of burning wood and coal for heat. Coal fire was the cause of the infamous London “pea souper” fogs, for instance. It’s hard to remember now but burning gasoline and natural gas were significant
improvements in the levels of pollution (and other hygiene factors) in cities during the 20th century. Of course at that time the only air pollution people were thinking of was particulates.
Also it looks like Kathmandu is in a valley which can concentrate the issue so a smaller absolute amount of particulate pollution can have more impact than the same activity on a plain.
I also question the “living memory” assertion.