ah, Captain Birdseye! A man with discernment! *smile* It IS a 'broad church', but there is much that does NOT belong in the pews.
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" Once I go to the appropriate section I will make my choices based on what I find there and will not agonise over whether or not it meets someones definition of what is 'folk' or 'traditional'."

This is reasonable unless the section is large and the store has vague ideas of categories, making the process of choosing tedious.

"... surely a song from the 50s is trad to someone born in the nineties and singing/playing in the naughties."

A dangerous distinction....Simply being a bit 'older' is not enough to
qualify something as truly 'trad'. There are a number of reasons to reserve some label for those 'older' songs or tunes which go back, (in style, subject matter, mode of presentation, mode of transmission...etc.) to the era before serious recording and 'commercial' music. It has nothing to do with 'good', and it is possible to play both 'trad' and 'sort of related to and derived from trad' in the same evening....but IF I wish to go to a concert and/or buy a CD of older stuff with a certain feel, it is helpful to have a label that assures me that's what I will get. Gradually subsuming more & more under 'folk' and 'trad' also gradually dilutes the categories until they lose most of their meaning.