In the following, I am assuming that your magic follows D&D rules exactly, up to and including the cost of casting a spell. I recognize that magic requires an external power source in your world, but I will ignore that for the present argument. The answer is that some forms entertainment could, in large cities at least, be quite similar to that in our world. The most useful spell here is persistent image, which can create auditory and visual illusions, including intelligible speech. Unfortunately, it only lasts 1 minute per caster level, which means that even a fairly powerful wizard might have to string together several such spells in order to create a reasonably long movie (say 1 hour). Suppose we have a level 12 wizard. This person could cast three persistent images, and two extended persistent images, for a total duration of 84 minutes. This seems a reasonable length for a movie, and in 3D and with olfactory components, no less. The total cost will be 3,240 gold pieces--quite expensive. Since the illusion can cover 16 ten-foot cubes, a screen can be created that is 160 feet by 160 feet: quite a nice viewing experience. Suppose that 100 people show up to this event. Then they must pay an average of 32 gold pieces each, about the cost of two carts. While outside of the paycheck of your average commoner, this is well within the budget of a noble or merchant (assuming they do not go too often).
However, it is possible that people will pay according to their ability, thus allowing much poorer people to ride on the coattails of the wealthy. Given that this requires dozens of wealthy individuals for a single night of entertainment, and given that there will also be development costs for the script of the movie, only major cities could likely support such entertainment, even leaving aside the difficulty in finding a level 12 wizard even in a high-magic setting. However, all is not lost. It is possible, given how easy spellcasting is for wizards, that a Good wizard might not charge nearly as much as the rulebooks list, and might even perform for close to free (plus the costs of paying the scriptwriter). Thus a single kind wizard of moderate level could perform hundreds of movies a year. With a 160 by 160 screen, which is about three times as long as a standard IMAX screen, this individual could quite possibly show films to around 1000 people, assuming good seating conditions.
So in large cities, illusory "films" would probably be huge events, paid for mostly by the wealthy, but attended by very large crowds. People would come from the surrounding towns to see wizards put on plays. In smaller towns, the situation might be different. Instead of large cinematic experiences, even better in many ways that modern movies, there would mainly be more traditional forms of entertainment, such as ordinary theater. However, ordinary theater would frequently be much more realistic than traditional theater, since even the meanest wizard can learn to create a silent illusion or disguise themselves as another. In addition, realistic physical effects, such as fire, could be created by a fairly low-level wizard.
I have mostly focused on Illusion, but there are applications for the other schools. For example, Necromancy would be popular among people looking for certain forms of adult entertainment.