Audience, whether singing along or listening I think does depend upon the singer. A cognate is my local call-in NPR talk show radio program, that always invites audience participation, but sometimes the guest is so riveting that we just want to listen (and the host usually tells the guest that that is the case). I think the same is true of some of these folk venues.

I'll name some names - Don Firth, late mudcat member from Seattle, had an incredible voice. I wouldn't have wanted to sing along because I wanted to hear his voice, as did the audience. Stan James, who died several years ago, was another. And Deckman, Bob Nelson, has a beautiful voice. I think I've heard mg (Mary Garvey) sing a couple of times (Rainy Camp) - she has a wonderful voice, and I'd rather listen than join in.

Some of this is organic. And some of it is manners. And certainly, I agree that if the performer states their preference at the beginning, the audience should honor it.