Most of Indonesia's 210 million Muslims practice a moderate style of Islam that condemns violence, and the government has worked to root out militants, arresting more than 700 of them since the bombings and killing dozens more. Terrorist attacks aimed at foreigners have been largely replaced in recent years by smaller, less deadly strikes mostly targeting police and anti-terrorism forces.
"Instead of spreading the seeds of hatred, that heinous attack has prompted governments and peoples of different backgrounds, of different nationalities and religions, to reach out to one another," said Indonesian Foreign Minister Marty Natalegawa. "To stand united."
Tourism, meanwhile, has bounced back. More than 1.8 million foreigners arrived in Bali prior to the attacks, and last year 2.7 million came to the island where Julia Roberts filmed part of the movie "Eat, Pray, Love."
"It was a big thing for Australia because this is ... like our second home to come to. It was pretty devastating but you know, it happens all over the world," Mitch O'Brian said while enjoying a holiday in Bali. "I'm not afraid to come here because it's a great place."
Security was tight at Friday's memorial with more than 2,000 police and military deployed, including snipers. Two days earlier, police said they had received information about a potential terrorist threat. Bali deputy police chief Brig. Gen. Ketut Untung Yoga Ana said new intelligence indicates the threat may have weakened, but he added that security forces would remain vigilant and continue to closely monitor movement in and out of the island.
Last month police arrested 10 Islamic militants and seized a dozen homemade bombs from a group suspected of planning suicide attacks, but to Bali hotel operator Gde Wiratha, that was in part a sign that the threat remains.
"Bali was very safe before the bombing ... but now no one knows," he said. "I, myself, still have fears that radical groups like Jemaah Islamiyah are still far from being defeated."
Associated Press writers Kristen Gelineau in Sydney and Niniek Karmini in Jakarta, Indonesia contributed to this report.
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