I haven't looked at the ESTA thing in a long time, but from what I remember it does ask explicitly whether you plan to work in the US etc. etc. If you tell a border inspector that you're planning to play at a music festival then naturally he's going to assume you mean ot engage in commercial activity. It is up to the individual to read up on the requirements and exercise some basic common sense (ie customs/immigration officials tend to be pedantic bureaucrats wherever you go, so be circumspect).

Sorry, but I think you're projecting your biases here with comments like 'they chose to let him come, knowing they would refuse him.' My reading is that he probably answered 'no' to all the ESTA questions and then confused the CBP agent by giving contradictory answers to his questions. I'm European myself so I'm not carrying a particular torch for US border agents here.