We've got some definition problems here.
(1) The term "traditional publisher" is anywhere from meaningless to misleading. It's a term that appears to have been popularized in the early 1990s by Northwest Publishing, Inc., a vanity publishing scam that ended up with both principals in jail (in fact, they're still there). Instead, what I think was meant is "commercial publisher," which refers to any publisher whose revenues come from the stream of commerce. That includes small presses, university presses, and the behemoths in New York.
(2) "Self-publishing" and "vanity publishing" are not at all the same thing. There is a very, very narrow set of circumstances in which "vanity publishing" may make sense; in particular, the author must not intend to make a profit (or probably even break even), get his/her works into bookstores, or build a publishing career on the basis of that book. The paradigmatic appropriate vanity publishing project is the family geneology, with its potential audience of perhaps 50 to 75 people, if the individual who wrote that geneology is not capable of the (increasingly simple) tasks necessary to get a manuscript ready for self-publishing.
(3) It's not self-publishing if somebody else's identity is on the book. iUniverse, for example, is not self-publishing—it's relatively low-cost vanity publishing, because the imprint on the book is iUniverse (and the ISBN is iUniverse, and one must place orders through iUniverse, and…).
All of the above said, keep in mind that there is a lot of deception in the publishing industry, fostered by the culture of secrecy in the industry. (Example: As an author with a commercial publishing contract, ask to see a copy of the cost-sales—sometimes called profit/loss—analysis prepared during consideration of your most-recent book.) My concern is not with legitimate self- and vanity publishing; it is with the pervasive fraud (and misconduct just short of fraud). Think of it like buying a used car: There are honest used car dealers out there; just don't count on the one you approach being one of them.