Lucy, the differences between folk and Folk are nuanced and layered. On the level of definition '54 Believers (do a search - hours of fun) say folk is a process but not a sound and non-believers tend to hear a sound and little process.
The 54 argument goes slightly awry in so far as 99.5% of traditional music is played on traditional instruments in folk venues, even though The Definition would allow for theramins, flying V electric guitars and the BBC radiophonic workshop delivering the goods, leading many to suggest sound modes are underplayed (sic) as a means of defining what folk is. (54'ers will be asking how I got to 99 and a half percent which kind of shows the thinking)

It's more complicated than that. In our folkier than thou moments some of us might suggest the spirit and letter of folk are better served in ruthlessly uncommercial environments and en plein air performance - or at least those outside 'designated folk contexts' (another search for you) to remove any sense of stardom, virtuosity, guruship and so on.
The majority are sussed enough to take all forms up to and including the lovely Kate Rusby at the Albert Hall (that girl eats her crusts but I don't know where she plays) as versions of folk without blowing a fuse. All conduits from YouTube to Wembley are commercial industrial in some way.

Hope that helps a bit.