People really misunderstand the nature of old school D&D - probably because they played it when they were 10 at best, or heard about it from people that played it when they were 10. And 10 year olds are usually pretty bad GMs, especially in a system that gives them a lot of freedom.
That nature is often overemphasized, I think. While it's true that in the first session of AW you're supposed to do a bunch of that, that's fairly limited (per the examples, not explicitly) to the first session. The examples from other areas tend to be more traditional in their approach.
That said, there's a huge culture around AW and other "narrative" games that emphasizes that. However, the games work just fine without it. It's the "what's in the box" question - if you ask the GM what's in the box, how do they answer? It can be predetermined, it can be random, it can be made up, or they can ask you. Or, often, some combination of the above. But each answer will appeal to different people.
Personally, I prefer avoiding the last one outside of game setup. Most player input beyond that is what I call "implicit" input - if a player is obviously assuming something to be true or real, and it's reasonable, then they're correct in their assumptions. I might also play with letting players not involved in the current scene come up with stuff to keep them involved.
But the "EVERYTHING MUST BE MADE UP BY THE PLAYERS" (okay, I overemphasize slightly) crowd is real, and they're very vocal, and I frankly push back against them where I can (I do have a bit of a voice in the Fate community overall).