I wonder whether the people who've been part of a tradition, who grew up with it and learned songs that were passed down through the years in their families and home places, ever cared about labels.

I do agree "folk" us mostly a marketing tool, a label for people to know what bins music should be (probably) found in. Labels help with communication. Outside of that, pedants and those concerned with obsessively categorizing things use them to try to make the fuzzy, fluid world fit into their concrete definitions. This activity has no chance of ever succeeding, and leads to constant arguments having no chance of resolving. While these are incredibly frustrating to who believe all arguments should end with some agreed upon conclusion, that's not going to happen.

If you really think about it, definitions don't matter much. The music will happen, and let's hope academicians, pedants, and obsessive categorizers are ignored by those making music.

If there's one thing that most makes me want to stay away from some folkies or groups of folkies, it's the sneering. It's the people who use the term "snigger-snogwriter", or say "it's nice, but it's not what I like because it isn't traditional", or "horse alert". The more I read these futile but fervent attempts to lay down the law and ridicule those with differing ideas, the more I realize that it's all just music. It might be traditional, and it might not, but every song that is not traditional is capable of becoming so. Individuals don't really affect what happens with a certain song--it's more about the song itself and whether enough people like it to adopt it. Sure, the obsessive categorizers, sneerers, ridiculers, and wannabe rulers of the folk universe don't like the fact they don't have any control over the whole process of of a song being adopted and becoming traditional, but they don't.