Geez, I think there are as many different versions of appropriate childrens facilities and policies as there are folk festivals in the world.Which makes me treasure all the more our two local folk festivals, Blue Skies (in the deep Ontario woods) and Stewart Park (in a small-town park). Blue Skies is free for kids up to, um, 13 or so, not sure really, and Stewart Park is free for everyone. Basically parenting at a festival is the same as doing it anywhere else: if you can trust them to go off with their friends and check in when they're supposed to, there is no problem. Blue Skies has excellent child activity stuff, and you can position yourself on the hill such that you can see both the childrens' area and the main stage.
Dave tG, despite your experience and excellent points, I think your being a bit, well, anal. Kids gotta run sometimes. Parents are not wardens.
One thing I learned putting on small-hall folk concerts is that half-price tickets for youth age 18 and under is a great idea. Never got that many of them anyway, the ones that do come want to be there, and it helps put bums in seats to hear music which is what concerts are about.