Presumably because back then they actually played "folk music" which required no amplification which made it a type of place accessible to anyone, you didn't have to be in a band to do it.

This went into decline as I suppose everything does, but "folk music" then degenerated into a catch-all performance opportunity for former wannabe pop singers reliving their youth, failed or failing musicians from practically every other musical genre.

I do not go to a folk club to listen to an endless stream of 50s, 60s, 70s or 80s pop songs bashed out with widely varying competence by people using crib sheets because nobody knows the words.