Pete Seeger once described to me as what he thought was an ideal Hootenanny. He saw it as a concert format in which the audience would participate by singing along. Pete didn't want it confined to just the popular notion of folk music. We discussed taking a jazz tune like "How High The Moon" and teaching the audience to sing a counter line while musicians on the stage or a singer would perform the song.
Pete may have learned the name from a Seattle event but this concept is probably more in line with how folk music is taught within a community. Often in a rural setting, singers were called upon to lead singing and the sense of participation came about because of the audience ownership and involvement of the music. This came through churches or back porch get-togethers where the music emphasized the uniqueness of that community. This idea was certainly not invented in Seattle, although this label to describe this process that Pete and Woody had heard apparently started there.
This is what folk music really is, a sense of participation where the performer is part of the audience and attempts to involve them. This is in contrast to the concert performance where the audience is a spectator and the wall is built up between performer and listener.
The attempt to tear down the wall and allow singalongs, clapping, participation in movement and even leading to a dancing audience distinguishes the Hootenanny from other forms. Maybe a rock concert might be a form of Hootenanny also or a street corner Do-Wop or hip-hop event also.
Folk music is like sand-lot baseball in that pure spectator sports lessens with the audience involvement.