Learn Spanish (Spain): Ayer participamos en el desfile del pueblo. - Yesterday we participated in the town's parade.

Yes, it is! For regular -ar verbs (and -ir verbs), the nosotros form is exactly the same in both the present tense and the preterite past tense. You have to rely on context clues to know which one it is. In this sentence, the word ayer (yesterday) is the clue that makes it completely clear this happened in the past.

Do we always use the preposition en with the verb participar?

Yes, when you want to say you participate in something, Spanish uses participar en. It matches up nicely with English in this case. So, participamos en el desfile means we participated in the parade.

Why does the sentence say del pueblo instead of just de pueblo or de el pueblo?

To say the town's parade in Spanish, you literally say the parade of the town. The word for of is de and the town is el pueblo. However, whenever de is followed immediately by the masculine article el, they always mash together to form the mandatory contraction del.

Doesn't pueblo mean people?

The word pueblo actually has two common meanings. While it can mean a people or a nation, it is very frequently used to mean a town or village. In this sentence, el desfile del pueblo translates to the town's parade.