Bob Coltman has it pretty close. "Folk" is just too handy as a short term for anything that is not pop or rock. I have been complaining/discussing the issue here for 20 years.
Because the word has been diluted until it means whatever someone wants it to mean, it ends up being so broad as to be almost useless.
The problem is, the backup word.. 'traditional'... has almost suffered the same fate. We now see people calling anything older than themselves,'trad'. And a careful search will reveal Dylan being called 'trad'. The antique business has pretty tight control over what counts.. and 'collectable' is used for more recent things.
   I am at a loss to figure out what to call 'folk' music that is really a product of either anonymous sources or so embedded in the culture that its authors are perhaps known/knowable, but is passed down thru oral tradition. I guess that if someone wanted to announce a singer or a concert of such music, they could call it "really, really old" but... *shrug*.

   I have actually heard a singer say, "I am a folk singer, so the songs I sing are folk." What are you gonna do?