Proximity effect varies with different microphones.

The Shure SM58 (ice-cream cone shape with big gauze ball on the end that you sing into) is a close vocal mic, which will pop quite badly if you are around two inches away, but not if your lips are practically touching the gauze. They are not really suitable for 'loose' miking, as the frequency response is 'tailored' for close vocals.

Microphones which are similar in appearance to the SM58 are likely to behave in a similar way.

If a microphone is fairly cylindrical in shape, possibly with a foam windshield, it is more likely to be suitable for 'loose' miking.

Although I am an audio engineer by day, I prefer folk clubs without a PA system! I accept that some guest performers prefer to use PA to 'save their voices', although I have never found I needed to!!

The size of room can make a difference, of course, but few folk clubs are in very large rooms - by which I mean an audience capacity of more than 100. Such 'clubs' are really concert venues, and do need some PA.

I don't think an 'open mic' session is on a par with 1970s folk clubs per se, although there may well have been some clubs which would nowadays be regarded as 'open mic' venues.

Just my opinion, mind...! Sadly, I'm old enough to remember!!