We have that conversation alot at our house. We have lots of friends from both camps. As far as I can tell the main difference seems to be the style of jamming/performing. At an old time jam the idea is to play the main tune (melody) over and over until everyone gets it. There is very little straying from the main melody, and everyone plays together all at once. There are mostly fiddles and claw hammer banjos with guitar for the rhythm. In bluegrass at jams - each player takes a turn playing the melody and they like to "embellish" it a bit as they go. There are fiddles, banjo's mandolins and guitars play the melody while the upright bass holds down the rhytm (along with the players who are not taking a turn with the melody). The styles come from the same roots, celtic and african styles brought to america by settlers and slaves. Bluegrass grew out of the old time traditions of playing fiddle tunes for square dances. The dances were a main source of entertainment for communitites before there were other things to draw us away from interacting like tv, the internet, and 9-5 jobs. In my opinion either version of continuing these decidedly "American" traditions is a mighty fine way to connect with our fellow human beings and find community through music.