Perhaps if I saw the actual situation Keef is talking about, I would get his point. In my own experience, I couldn't begin to count the times when I've been in settings, ranging from just big enough that a mike and modest PA was called for to large open ampitheaters where major systems were essential, in which the audience has joined in loud and strong at every opportunity.
To the degree that amplification is cranked up beyond what is needed to hear the perfomer properly, to that degree it will wall off the audience as non-participants. (Unless you count incoherent screams as audience participation).