"Context-neutral" is how I usually here the word "farang" described by people attempting to play down its significance.
However, I and every expat I spend time with hears this word used often to label them, whether they are in a shop as a customer (where they could just as easily be described as a "customer" thus not differentiated from the other customers in the shop who are thais) or in a whole range of other situations where the thai words for "person" "man" "client" "employee" etc. However, the preferred method for thais is to highlight the ethnic differences of the person they are referring to, hence "This farang wants to buy a light bulb. Do we have any?" is the preferred choice of words.
Why? Why is ethnicity important to the question being asked about availability of light bulbs? Why build the context of the question by adding an ethnic label to it? Actually, from that, I can see that it actually adds nothing to the context of the question, hence it is either pleasure/reassurance-seeking or pure thickness and bad habits that force thais to use ethnic labelling in this way. They are brought up to do it, as thailand is a place with many laws (restricted trades, business ownership, and land ownership) to limit opportunities for expats, so the use of a word to label and differentiate them probably makes sense too, and there is nobody with any power to be able to do anything about it, since it doesn't adversely affect thais at all (apart from being thought of as pig-ignorant or xenophobic by some).