I've always assumed "world music" essentially means "folk music", but from everywhere. My impression is that Irish instrumental music especially tends to be seen as quite at home in mixed company. For some odd reason when English music is involved a lot of people tend to assume it's Irish.

But, for places where people really seem to turn their back on their own musical traditions, my impression is that it's a lot worse in other European countries such as Holland and Germany, where enthusiastic folkies seem to be totally unaware of their very existance.

At least in England if people are into folk music (a very big "if) they tend to be aware of and respect the English music, even when they are more likely to be trying to play the Irish, for example. (It tends to come out sounding English anyway.) That's in spite of the Morris Dancer jokes, which really aren't any more serious than the bodhran jokes and the banjo jokes.