Folk music is music of the people for their songs and dances. It is part of a tradition and sometimes rises to the mainstream. Many classical composers such as Ralph Vaughan Williams and even Beethoven have pillaged the repertoire of traditional music for new pieces. In turn, folk has pillaged classical for good tunes. Fair's fair. A good example is Ludwig's Reel - using a well known motif from Beethoven's Ode to joy as a reel.
Folk music is mainly Acoustic (instruments and voices unamplified) but as a living tradition, it is played on a wide range of instruments including Electric Instruments and is often amplified by a P.A. System for medium to large venues. Instruments are not fixed or dictated. Anything that comes to hand is pressed into service.
Folk music, Traditional Music, World Music and Roots Music tend to blur into the same sort of thing but are, perhaps subtely, different. Folk music is past present and future. It is contemporary interpretations of old tunes passed down and it is new tunes composed today and a whole range that will be composed by generations yet to come.
Folk music has a simplicity of form that makes it accessible to ordinary people and a relaxed style that takes the pressure out of performance. There is a spontaneity about folk music when it is played for events and gatherings rather than concerts or recitals.
Often tarred with the 'early-second-revival-folk-club-Arran-sweater-and-finger-in-ear' brush, folk is much more and is now entering the mainstream in its own right with folk performers such as Kate Rusby in the charts and folk influences being heard everywhere.