Actually, it's west (not sure how I messed that up). Yes, it's a fully functioning town/city of ~60k people with all the major things you're used to (convenience stores, grocery stores, etc.), though you might need to go into Toluca or Mexico City if you're furniture shopping or something.

It's a common weekend and holiday destination for people from the city and there's some foreigners living there permanently, though the big draw for foreigners is the paragliding community.