Are there distinctive traits (melodies, scales, chord progressions, rhythm, techniques) that set the genre of folk music apart?
"Folk music" is not a genre. "Folk music" is many hundreds of different genres.
There are three broad categories of music, "classical", "folk", and "commercial".
Folk music is simply whatever music that is made by people as a part of their culture, casually, and with no real expectation of earning money from it.
Folk music depends upon the culture from which it derives. When people talk about the folk music of the USA, they are usually talking about music from rural communities in the Appalachian Mountains composed of the descendants of immigrants from Ireland, Scotland, and England, and reflecting the musical traditions from those nations that the first immigrants brought with them.
This is ultimately the particular tradition that Bob Dylan drew upon, despite the fact that Dylan is a Jew from the Midwest. However, Bob Dylan does not represent real folk music. When a musician becomes part of the major label record business, and their music is recorded and sold and marketed for profit, it changes. It becomes less folk music and more and more commercial music.
There are many different kinds of folk music in the USA that have little to do with the kind I've previously mentioned. When you talk about folk music from the upper Midwest of the USA, you are talking about polka music inspired by the descendants of immigrants from places like Poland and Scandinavia. When you talk about folk music from New York City, in its form around the year 1900, you are talking about klezmer and Yiddish theater music inspired by the descendants of Jewish immigrants from Eastern Europe and Russia and the nations around it. Folk music in Louisiana (exclusive of the city of New Orleans) is influenced by the Cajun people, who are remotely descended from immigrants from France. Then of course there is African-American folk music, such as the blues, which is influenced by descendants of the slaves brought from West Africa to the USA. And so forth.
All of these different kinds of USA folk music have their own characteristic instrumentation, melodies, phrases, time signatures, tempos, different languages for the lyrics, and different kinds of traditional subjects for the lyrics.
There is only one kind of folk music in the USA that does not come from an earlier musical tradition from somewhere else, and that is Native American music.
Bob Dylan is one thing; if you want to identify what characterizes other kinds of "folk music" you need to start by being much more specific about the particular culture you are examining.
"All music is folk music. I ain't never heard a horse sing a song."
-- Louis Armstrong
First off, let's narrow things down a bit here. It sounds like you're talking about American folk music rather than folk music as a whole. Other folk musics would take a book to explain.
American folk music has the following characteristics:
- Acoustic instruments
- Simple chord progressions such as C-F-G or Am-G
- Simple time signatures such as 3/4 or 4/4
- "Sharp" or natural keys such as C, D, E, G or A
- Simple scales such as pentatonic minor (blues), pentatonic major, major, melodic minor and mixolydian.
- Simple melodies based on tropes from Irish, Scottish and English music of the 1600-1700s OR simple melodies based on African American music of the 1800s (or earlier).
There is an very wide range of folk music technique but for guitar this includes:
- Fingerpicking, including the Rev. Gary Davis thumb and two fingers technique
- Carter-style strumming with the thumb punching out the bass note runs while the fingers pluck chords
- "Boom chuck" strumming with a pick.
- Open chords played at the nut.
From an English perspective, 'folk music' has just as much variation as previously stated, but the main sub-genres seen are traditional folk and the American folk described above. I'll leave the American stuff to these guys who have summed it up quite nicely, but the traditional music can be categorised by a few factors.
- It is generally harmonically and rhythmically simple, revolving around 3 or 4 chords in a key, with the tendency to change keys between sections. This allows players of any ability, whether they've played trad folk before or not, to join in and enjoy the music.
- The songs often have a progressive story line, whether it be a shanty-style tune, or a stereotypical murder ballad (for example, see William Taylor). Originally, a lot of stories were told through song, and this is what people tend to define as 'folk music'.
- Instrumental breaks are common, where, particularly in live groups, each performer (within reason) will take a turn at leading the band with their own variations on the melody, a bit like a solo.
- A lot of traditional music is written in natural keys, with most songs written in either C, D or G. This naturally suits the instruments on which it is play, like the accordion/melodeon. Also, it generally provides a key that is suitable to most voices, so that it can be sung by large groups of people.
The main thing about this style of music is that it is designed to be accessible. It thrives and gains exposure through the live music scene, with folk clubs generally being held in pubs. All clubs invite anyone with an instrument to come and join in and the music accommodates this.
I tend to find that anything that has a chord progression in the key of G with 4/4 time, and hammer=ons in the base notes will sound very good and folky. Also as a little tip when you are moving to a g chord on the a string try sliding from the 1st fret to the 2nd fret where it is supposed to be for a G chord. Happy hunting for your sound.
Most European folk music and diaspora stem from Indo-European pastoral music which is rooted in the natural scale, not the diatonic scale. The problem is that the two systems have combined which disguises the natural scale. So the major and minor modes and triadic harmony come from the natural scale and are at odds with the original ecclesiastical modes and the Pythagorean-tuned diatonic scale (missing the leading tone at the time).