This is what the statutory Guidance to the Act says.

Small venues providing dancing and amplified or unamplified music.

5.4 In addition, subsections (1) and (2) of section 177 of the 2003 Act provide that where
• a premises licence or club premises certificate authorises the supply of alcohol for consumption on the premises and the provision of "music entertainment" (live music or dancing or facilities enabling people to take part in those activities),

• the relevant premises are used primarily for the supply of alcohol for consumption on the premises, and

• the premises have a permitted capacity limit of not more than 200 persons

then any conditions relating to the provision of the music entertainment imposed on the premises licence or club premises certificate by the licensing authority, other than those set out by the licence or certificate which are consistent with the operating schedule, will be suspended except where they were imposed as being necessary for public safety or the prevention of crime and disorder or both.

5.5 In addition, subsection (4) of section 177 provides that where
• a premises licence or club premises certificate authorises the provision of music entertainment (live music and dancing), and

Guidance issued under section 182 of the Licensing Act 2003

• the premises have a capacity limit of not more than 200 persons

then, during the hours of 8am and midnight, if the premises are being used for the provision of unamplified live music or the facilities enabling people to take part in such entertainment, but no other description of regulated entertainment, any conditions imposed on the licence by the
licensing authority, again other than those which are consistent with the operating schedule, which relate to the provision of that music entertainment will be suspended.

5.6 Section 177 can be disapplied in relation to any condition of a premises licence or club premises certificate following a review of the licence or certificate. This means that conditions attached to the existing premises licence relating to the provision of music entertainment can be given effect at the relevant times or that new conditions may also be imposed as an outcome
of the review process.

5.7 Accordingly, those seeking to take advantage of the exemption relating to both amplified and unamplified music entertainment need to be aware that they must hold a premises licence or club premises certificate covering the supply of alcohol for consumption on the premises and the type of regulated music entertainment involved.

Examples of premises used "primarily" for the supply of alcohol for consumption on the premises would include public houses and some qualifying club premises, but would not normally include, for example, a restaurant.

For the "unamplified" music exemption, any premises appropriately licensed are included, including restaurants. The area to which the 200 "capacity limit" applies concerns the area covered by the premises licence or club premises certificate and not just to part of those premises unless separately licensed.