Well, the 'answer' to the original question, as I see it, is we in the US are mono-lingual. Most don't grow up speaking any other languages but English. This means that the folk song traditions accessible to us (and to audiences) are those of English-speaking countries. So if you're into folk singing, you tend to get into the British Isles. And there is a large overlap of people for whom that was their distant nation of origin anyway.

People of German and Slavic decent who are more 'into' their own musical roots rather than ballad stuff tend to go into instrumental bands in general, and some into ethnic polka bands, which are their own little interest groups. Hispanic bands and groups also exist and operate in their own widening networks. Same with Cajun bands and groups, and Klezmer, etc. We could theoretically all learn each other's songs phonetically, but we'd wind up with puzzled audiences and screwed-up traditions.

In other words, there are a lot of 'traditions' active around here, and the English speaking one just happens to be the one called 'folk'. It doesn't make sense, but that's how it is.