What language is Nepali most similar to?

Yes Nepali and Hindi languages are similar in structure as they both belong to the Indo-Aryan branch of the Indo-european language family. But so do hundreds of other languages such as Punjabi, Gujatati, Assamese etc. Nepali belongs to the Pahari group within the Indo-Aryan branch and is further categorised into the Eastern-Pahari sub group.

Many Nepali speakers understand Hindi but most Hindi speakers cannot understand Nepali. This has got more to do with globalisation and majority Hindi speaking India's cultural dominance (including media) in the region. For example, my grandmother who is from nepal hardly understands hindi as she has not been effected by globalisation as much.