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.