Can't speak for the USA, but here (UK), there are a number of reasons why people get territorial. here are a few:

- Some people see themselves as the current guardians of an endangered cultural garden which has to be passed on intact, and kept free from invasive xenophytes.

- someone has usually "owned" some sorts of folk: Sharp, Karpeles, the EFDSS, the Communist Party, the Morris Ring etc.

- the X factor: it's always been easier to get acceptability (and so better payed gigs than folk clubs) by making it sound more like mainstream pop/ rock. This makes more people interseted in folk in the broader sense, but also makes the uninitiated wonder why Fred Jordan didn't sound as "exciting" as Fairport Convention. American folk/ country/ blues style also has a higher general prestige than most native styles. Traditionalists find themselves marginalised in the general musical world, and the wider musical world is astoundingly ignorant of traditional music.

- folk singers/ musicians are a bit like trainspotters, intensely involved within a small community, in which it's easy for minor disgreements about abstruse points to be magnified into major issues.