Bill Stevenson, who was selling Eastern Shore-variety crab soup in a bar in Baltimore's Fells Point neighborhood yesterday, shook the hand of a passerby, quickly placing a name with the face.

"Hi, Oscar," he said warmly, then explained to a stranger, "this is a friendly neighborhood. Everyone knows everyone. In fact, many people don't have cars. They just stay with in Fells Point."

The intangible, though frequently mentioned, pride of Baltimoreans in their distinctive neighborhoods transforms itself into community festivals weekends after weekend during the warm weather, as Fells Point did yesterday.

There, amid 18th and 19th Century homes and storefronts squeezed among six-story warehouses along East Baltimore's waterfront, thousands of Fells Point residents and their neighbors from all over the metropolitan area milled to sample ovenpit barbecue. Polish and Italian sausages, Irish coffee and Maryland hard crabs.

It was a chance for local senior citizens clubs to sell crocheted dolls to raise money for a future bus outing somewhere and flea market collectors to hawk their $20 seal coats and shoulder-high piles of denim wear.

A crowd as diverse as the city itself gathered. Black Muslim Shabazz chefs and assembles of Greek souvlaki sandwiches cooked side-by-side as middle-aged women in beehive coiffures, muscular motorcycle jockeys, elderly men in floral leisure shirts and young women in skirts slung low enough to show their navels doled out change for a trinket or a treat.

"We always come to the Fells Point Fun Festival," said Ruth Mercer from Dundalk across the harbor. "I love all the ethnic groups in Baltimore. We go to something like this every Sunday."

The annual Fells Point festival, which has drawn crowds up to 150,000, is one of the oldest and largest of community "happenings" in this city of festivals.

Begun 11 years ago to raise money and engage community spirit to fight a proposed link of the 1-83 expressway that would have sliced through the historic community built by seamen, the festival now brings in $10,000 to $14,000 a year for the Society for the Preservation of Federal Hill and Fells Point.

Northwest across the city in elegant Bolton Hill, the $1,500 profit from a festival held there last weekend will purchases shrubbery and hanging baskets for the parks and medians laced among the Victorian homes.

In Pimlico, another of the city's 100 neighborhoods holdings festivals, senior citizens styled hand puppets of horses. In Windsor Hills, the women sewed dolls of differing races to portray the special character of their community.

Three blocks west of the Inner Harbor where urban homesteaders are converting 113 vacant dwellings they purchased for $1 into a middle class community, Jan paul Miller promises a festival "as soon as we can get an open street."

Baltimore's festival craze proliferated after 1970, when the first City Fair was organized by volunteers to recover pride lost in a downtown made decrepit by riots, fear and neglect. Two weeks ago in its seventh year, the City Fair drew two million people into the center of town, where redevelopment of the Inner. Harbor and the commercial district has blossomed into skyscrapers and plazas.

The surprising success of the first city fair, which attracted 350,000 comers just a year alter some racial problems upset the genteel Flower Mart up on stately. Mount Vernon Place, led city officials to promote festivals as a psychological turn-around that could be translated into economic development.

Mayor W. Donald Schaefer, who took office in late 1971, is the man most frequently credited with elevating the provincial neighborhood pride into a city wide boosterism.

"It's great if you feel chauvinistic about your particular corner of the world, but for an urban liver, each neighborhood is dependent on the survival of the others," said Sandra Hillman, who heads the city's Downtown Coordinating Council.

"Because of the festival most people here know the names of the other neighborhoods, their location and something distinctive about them," she said.

While the City Fair is a volunteer effort. Hillman's office has sponsored 12 ethnic fairs where predominently Jewish, Scottish, Afro-American, German and Ukramian neighborhoods get a chance to display pride in their communities.

"It's a neighborly city," commented a man in the Fells Point crowd. "You go downtown on a Saturday night and you inevitably bump into someone you know. Washington, on the other hand, is the most impersonal city you could find. It's a city of transients. Here, people have roots."

The festivals exploit the parochial pride and attract Baltimoreans to neighborhoods they've never seen. They also pacify the tensions of urban diversity, such as the influx of young singles and their bars into Fells Point, which Julia Zack, 69, says mournfully, "ain't what it used to be."

As David Carroll, a city planner who lives in Bolton Hill explains the phenomenon, festivals "help people become less isolated. They're less afraid of each other."