I read that Ireland and Scotland are not Celtic, that no one in either countries ever called themselves Celtic before the 18th century, but that they had interactions with Celtic people. A lot of historians even claim that "Celtic" shouldn't be used outside of referring to the language family because it creates confusion, but when I read Irish and Scottish history they're often classified under "Celtic Myths" and such.
I was wondering perhaps the problem historians had with "Celts" was one to do with race rather than culture, and that Ireland and Scotland were indeed Celtic but the idea of "Celtic Blood" did not exist. I'm very curious about this entire issue. I know that the "Celts" did exist at some point, but I cannot comprehend the distinction being made when referring to Ireland and Scotland and why there's such a mess.
While it's not quite your question, I asked a question earlier this year on the similarities between Continental and Insular Celts. The excellent answers from /u/depanneur explain how there isn't much in common between them, which undermines the value of "Celtic" as a cultural group.
You're right that the term "Celtic" is fairly contentious at this point in time, in certain circles. You're correct that no one in Ireland or Scotland ever identified as "Celtic," but to be fair, we don't have any evidence that the continental "Celts" ever identified that way either: the only written sources we have that discussed these peoples are written by Classical authors, and whether the term "Celtic" is valid even in that context (or was simply a general designation for people outside of Rome) is sometimes questioned.
The first people to link the modern Celtic languages with the name "Celtic" were Paul Yves Pezron and Edward Lhuyd, Lhuyd being the first and Pezron finding the links between Brythonic and the peoples mentioned in these classical sources.
The original idea, which is now actually fairly contentious, was that the Celtic peoples of the continent immigrated en masse to the Atlantic archipelago, settling there and bringing their language. Links between Irish manuscript material and the writings of the classical authors was cited as evidence of a continuous "Celtic" culture, or at least cultural links. The similar artistic motifs were also considered to be evidence, though nowadays some suggest these spirals and "Celtic" art weren't necessarily linked to a specific culture. So, on this basis, anything in the Celtic languages was determined to be "Celtic" and thus, the study of Ireland, Scotland, the Isle of Man, Wales, Cornwall & Brittany are considered to be Celtic Studies. The label persists, the field continues to be called Celtic studies. Academics like myself continue to identify as Celticists.
While I don't think there's any contention around classifying the continental Celtic languages as Celtic, or linking them to the modern, insular Celtic languages, more recent scholarship has suggested that there was no migration, and that perhaps the Celtic language was a form of lingua franca used up and down the Atlantic seabord for trade.
But, as to why it's an issue: none of the modern Celtic nations ever identified as Celtic, and perhaps no "Celtic" language speakers would ever have identified that way (not all linguists agree on the origins of the term, some claim its Celtic and others believe it to be Greek.) The use of the term is based off of links to language groups, and the suggestion that perhaps Celtic people migrated. If we accept the hypothesis that there wasn't any migration, and that Celtic wasn't the language of a particular group and instead was used by a variety of different groups, then what solid reasons do we have for identifying Ireland, Scotland, the Isle of Man, Wales, Cornwall & Brittany with "Celtic?" Why would we link them?
Personally, I'm in between on the issue. I haven't been swayed by either camp yet. You might be interested in the Celtic from the West series, edited and mainly supported by John Koch and Barry Cunliffe who are the major proponents of this theory of no Celtic mass migration. These are essay collections that cover a broad range of topics, archaeology, linguistics, DNA evidence etc. Joe Eska has a decent review of the second one I believe, that Koch then replied to - if you're interested in reading some of the debate.
J. M. Mallory's book The Origins of the Irish is a fairly reader-friendly breakdown of archaeological evidence with regards to Ireland.
I want to follow up u/purrprinthom’s answer above with a bit about the Twentieth century context of Celtic. The same Edward Lhuyd mentioned above founded the Pan-Celtic Congress in 1917, a political organization intended to advocate for the six modern Celtic languages. Speakers of Welsh, Breton, Cornish, Irish, Manx and Scottish Gaelic had experienced similar negative pressures from being minority language speakers governed by English or French governments. The tie to antiquity was used politically to push the idea that these languages were as important as Latin or Greek.
At that time young Celtic language speakers were being punished in schools for speaking their own language. Shared experiences of this kind have solidified the 20th and 21st bond between Celtic speakers, and to a degree between the descendants of Celtic speakers who lost their language. Negative attitudes towards Celtic languages continued throughout all of the 20th century and beyond, though with less government support, or even government opposition, as time went on. Pan-Celtic movements allowed Celtic speakers to present a politically united front. This is perhaps why academic theories on the disparate origins of Celtic speakers have appealed to non-academics who oppose government support of Celtic languages through schools, road signs, media, etc.
The word ‘Celt’ is akin to
Lithuanian verb Kilti – to rise - &
Latin past participle Celsus – raised; lofty; noble
Perhaps Celts meant ‘the nobles’ or the ‘highlanders’ (the Alps were rich in salt and iron).
Historians are constantly revising the narrative as new information comes to light and they strive to interpret it. So, whether there is consensus or not, matters not. DNA evidence though, confirms that the overwhelming male lineage of folk in Ireland, Wales, Scotland, Northern Italy, the Basque country, northwestern and northeastern Iberian peninsula, western France, Belgium and Switzerland descend from the olden folk described by Roman and Greek historians as ‘the Celts.’