It stems from an old proverb: “there is naught so queer as folk”, essentially meaning “people are strange”. The meaning of “queer” has shifted and narrowed over time to refer to sexuality, but kept its ties to this idiom, resulting in the TV show “queer as folk” and the generic phrase “queer folk”.

There is nothing especially pretentious or mythical about the word. It may just be your own assumptions/interpretations of it. Far more people have an issue with the word “queer” than they do “folk”. If you don’t like it, don’t use it, but you should also aim to shake the stigma from it, as it’s not what 99.9% of people mean when they use it.