I had assumed it was because there are all these folk clubs in England that meet in bars - pubs, to use their term - so you can drink and sing, which doesn't happen much on this side of the pond; the bars want much more "hard-drinking" music. Folkies in the US mostly neither drink heavily nor have much money to spend on drinks at bar prices.

So these people get in the folk club and get drunk, and they're so drunk they're flat on their backs on the floor, with their arms and legs stretched out so they won't sink further. But they still want to sing, so they sing from that position.

That's it, isn't it?

Peter