How could people prevent the rainwater from running down the steep mountain side so that it could be used for agriculture

When it rains in the mountains it causes flashfloods so it is unsafe to go camping in low ground or mountainside until the rains are over. The water is collected using dams. The rest either forms temporary small lakes or is absorbed by the porous sand into ground water table, people traditionally dug wells to get to that water (for farms they will set-up a mill-type contraption to get the water out continuously for irrigation). The rest (above ground) evaporates. 

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Hungary. Keep in mind this was A LONG time ago so it's medieval Hungary because large army's, good economy. !