I think if you follow the analogy/pun about playing with yourself too far, performing in front of an audience would start sounding a bit dodgy too.

A lot of the time in folk music the distinction between the performer and the audience isn't that great. A group of friends playing music together in an informal setting can be both at the same time.A band playing music for dancing and a caller would look pretty silly without the people on the floor dancing.(That sometimes happens, and they can look pretty silly.)

Whatever word we use for - and entertainment is one which has been degraded - if you aren't grabbing someone's attention and making them want to hear more, something's badly wrong.

I love the story Steve Knightley (Show of Hands) tells of the time he rang up an insurance agent for cover, and he said he played music, and the man wants to know more, and he explains that he's what might be called a folk singer. And the insurance agent says "Oh that's fine. It's just that you'd have had to pay more for the policy if you'd been an entertainer."