Dirndls can be hard to date because they're based on traditional styles, and some go more with fashion, and some less. The metal buttons seem to imitate old Austrian coins - I think I can see a double eagle? Nothing wrong with that, you do see that kind being used in "trachten" fashion as we call that style in German.
A small Austrian or German size 40 would point at it being quite a bit older than 1980s or 70s. Could you measure it - bust (at the top) and waist, and the skirt length from waist to hem? The length of the skirt could be an indication (unless it's been shortened), and as for the size, I'll be happy to check it against my vintage sewing patterns from Germany and Switzerland - of course those can vary a bit, but it may give an indication.
And yes, it would have been worn with something similar to your modern dirndl blouse

. Though modern ones are sometimes cropped, just to below the bust - which I think is a relatively recent invention, before that they would have been normal length blouses.