Most native people in Japan fit the descriptions of:
A: Avoid talking to me because I'm a foreigner, therefore we can't communicate at all.
B: Just talk to me in Japanese like I should be totally fluent. I'm in Japan after all.
C: Speak to me in English or mix English and Japanese. (With varying levels of comprehension on both ends of the conversation.)
My favorite is type B. Especially when they understand they should keep things simple and speak slowly. I like that people don't feel scared to talk to me this way, as they are often nervous about using English. I think this is the best way for me to learn Japanese in context. It's common for staff in stores to use Japanese normally with all customers unless there's an obvious lack of understanding something essential. In contrast to this, in the case of filling out forms, usually staff assumes I have no ability to write in Japanese and offers to help. I've even had staff clearly write down kanji for me to copy from when I'm supposed to fill out a form and they aren't sure if I know how to write it. (While this is helpful sometimes, let's hope I can at least remember how to write my name and address.)
It's also much more common for people to speak to me in Japanese when I initiate conversations in Japanese. They can hear that I have an accent and might notice I use elementary school level vocabulary, but will know it's okay to talk to me in Japanese.
The funny thing is, I sometimes get asked for directions in Japan, by Japanese people. I'm guessing they don't notice at first that I'm not Japanese, or I'm the first person they see. I haven't ever known the place I was asked about, so I always have to say, sorry, I don't know where that is.
Once I got comfortable asking about or explaining around vocabulary I don't know, conversation in Japanese got a lot easier. There is still nervousness about how to say something new or starting conversations with strangers.
As an English teacher, I often hear that my students feel nervous speaking in English or asking for help when they can't understand. Letting them know I have the same problems when I speak in Japanese is reassuring and gives them some confidence.
One additional scenario is the awkwardness when I come across someone who isn't Japanese looking and don't know if I should use Japanese or English. Using Japanese with someone new who speaks English better can be funny or just plain uncomfortable.
How do you deal with the language barrier in Japan?
Do you mostly avoid talking to anyone?
Can you get by in Japanese alright?
Do you feel nervous talking to strangers and making new friends (in any language)?