No one's questioned the judgement of the musicians, whatever their choice, people are simply expressing their own preferences.

I think much of it has to do with stage presentation, which in turn has to do with the expectations of a particular genre. No one expects the London Philharmonic to play standing up. No one expects the Rolling Stones to play sitting down (although at their ages they have an excuse!)

The EFDSS-style dance bands invariably played sitting down, and usually read from music. The ceilidh scene which sprang up as a reaction to that (mostly from the younger folk club and morris scenes) wanted more energy and excitement. The musicians were mostly accustomed to standing to perform in clubs or for morris (and playing from memory), and it seemed natural to stand and move about to help to express that energy. I expect to see a ceilidh band standing (and while I'm not watching the band while I'm on the dance floor, I am when I'm not dancing)

However, there are plenty of good bands who sit down to play. Ultimately it's the music that matters. Standing or sitting won't turn a poor band into a good one, or vice versa.