There are a couple of discussions happening here.

Who defines folk? At my house, I do. At the vast majority of performances I've done, it is irrelevant. No one cares except for a few pedants.

Should bad singers get up and sing in public? God, no. Please learn your craft before taking it out in public, and please stop encouraging those who haven't. If you are never going to be good enough to perform, please don't perform. Just like me not flying an airplane or performing surgery.

I like that folk music is, more than other genres, participatory. I think it is important for non-performers to be able to take part. Camps, living room sessions, workshops, and the shower are all appropriate venues.

I spend a lot of time encouraging people to make music, and sitting with beginners and amateurs so they can experience playing music with and learning from others. Part of what I tell them is that if they want to go farther, they need to practice a lot, and have some way of evaluating their skills.