I, the poster, Susan Stringer, have been attending Science Fiction / Fantasy / Horror conventions for over 30 years. I even did a few years in the SCA attending Renaissance Fairs, etc. While I did ok as a single contestant, I didn't really start winning until I married my best friend and costuming partner, Jeff. Over the last 27 years, he and I have won more masquerade / costume contest awards than I can count, though not as many as some of my peers whom I greatly admire. One could say I've been around the block a few times.
Jeff hates the term "Cosplay" as he feels like it's just slapping a new name on what we've been doing since before most Cosplayers were born... and then pretending like it's something brand new. Personally, I'm all for people having fun dressing up and never letting go of that inner child who isn't satisfied to just read a book, play a game or watch a movie - we want to BE those characters... even if its just make believe for a little while. I don't really care what you call it.
In my mind, there IS a Hierarchy of Costuming.
Masqueraders are the people who not only construct our own costumes, but we also wear them in competition. Old School Masquerades demanded that the Masquerader not only be able to design and produce a costume, they also had to be able to tell the story of their character in less than one minute on stage, without talking! This involved the ability to select and edit mood music as well as a bit of acting or at least creative movement that complimented your costume.
Even in this category, there are levels. The ICG says that a Novice is a person who has never won a major award at World Con or Costume Con. A Journeyman is a person who has won once or twice. After your 3rd win, you move up to Master.
My dear friend Joe Phillips was the only Instant Master winning three awards at his first World Con. After that, the rules were changed to read "One as a Novice + Two as a Journeyman." All of us who know Joe will always love him for being that one and only Instant Master.
Costumers are people who build and construct costumes, either for themselves or for others. They may or may not enter contests. These are the back bone of creativity. Any idiot with a fat wallet can join the 501st if they shell out the big bucks to buy someone else's work. Costumers do their own designs or copy established characters. Recreation Costuming is, in my opinion, as hard if not harder than creating your own designs. First, you have to figure out how to construct a costume that may have never been done in real life, like CGI or animated items. Secondly, it has to be done on a limited budget, not a Hollywood "see how much you can pad the bottom line" budget. Plus, if you get anything wrong - every one who sees it will KNOW it's wrong!
Cosplayers are people who wear costumes and enjoy pretending to be their characters. They may or may not have constructed their costumes and may or may not enter contests. Old School term for that was "Hall Costumer". Regardless of the term to describe them, or the Cosplayer's ability to construct or assemble their costumes, they are an essential part of the modern Science Fiction / Fantasy / Anime convention. Almost all news coverage of any event will show the Cosplayers because they are the most fun, most imaginative and most visible members of the Convention Community.