You must have hit the Music Mode button. Once you pick up an instrument you can carry it around and play random notes with the Action key or you can hit the Music Mode/Whistle button to enter Music Mode, where you use all the controller buttons to play music or hit select/Tab to go back to walkabout mode. You can also attach items to the environment (Windy Trees, Drippy Branches, or Bubbling Brooks) to play a loop unique to that particular combination!