Folk horror is a term that has become popular, but also equally difficult to define. Perhaps that is why it is most helpful to talk about it in terms of the collections of elements or tropes that typically make up the subgenre.
Folk horror often involves folklore that to some people are considered fact or a part of their religion. This leads to another common element, which is religious cults. It often involves the spiritual power of nature, rituals involving animals and possibly scary folklore creatures, and it often includes rural and unfamiliar settings.
The titles that come up the most as origins of the subgenre are Witchfinder General (1968), The Blood on Satan’s Claw (1971) and The Wicker Man (1973).