I dont know what it was like physically in the music tents where you were. In my experience of playing at(mainly UK) festivals) there is generally a bit of dance space in front of the band, or maybe at the side or in the aisles, and kids get off on dancing to our music, along with some adults, and the rest of the adults sit in the chairs provided. If the accommodation provided for kids is basically seats, they will soon demand to be taken elsewhere for fun activities if they are provided somewhere else. I think if you encourage small kids to dance, they will go to the music tents. But they wont want to listen for that long if the music isnt danceable. Grownups(well, folk fans) like to sit for 40 minutes and listen to gentle songs in a tent on a summers afternoon. Little'uns mostly dont.