Costume is for everything other than East Asian media/participatory fandom, then its cosplay.

What I mean is that you not every costume is a cosplay and I wish people would stop calling it that. Jesus Christ. It's like referring to anime as simple cartoons. You could wear a Dorothy costume to anything: parks, parties, plays, etc and you don't have to be a fan because its passive. Everyone knows what she looks like but a Naofumi cosplay (which is a chore to create according to fans) is fundamentally inseparable from fandom because he is much less well known and his series requires significant investment and time. If you see someone wearing a Naofumi cosplay, you know that person is a fan. You can't say the same for someone wearing a Dorothy costume.

Another way to describe this is play Somewhere Over the Rainbow vs RISE (Shield Hero) in front of 100 people, and see just how much recognition you'd get. That right there is why costumes should be separate from cosplay because of the fan engagement of cosplay is totally different from just wearing something you'd pick up from Wal Mart or Dollar Tree.