What? Why? How is one supposed to carry rain gear then if not a small back pack is allowed.

The main reason given by hosts is security. Small bags make it harder to sneak explosives and guns into the festival. Some even search the small bags before admitting people to the festival. Many festival hosts report how much the vistors accept the security measures. OTOH they complain about about the lack of attendance.
A festival I used to frequent lost me as a customer because of their measures.
As a motorcycle rider I use a 5.11 Rush 12. The backpack offers enough room, is small enough to not be in the way and is ready for using a water bladder.

People at events often ask me "Where did you get that umbrella?"
I brought it. In my small pack.

I have gotten that question a number of times. “Amazon.”

Add: I thin everyone who hikes should have their own backpack; easier access to water, redundancy and room for their own gear

One main advantage of a small pack on trip or going to events is space- There's space for a little battery/ charger, a coat and a snack.