For a fictional character who is a musician, can I say that he/his band played in a real event like Farm Aid or the US Festival? What about mentioning other real bands, i.e. Aerosmith...know I can't mention real people names, but are the band names allowed?
This isn't really a language question, but one of literary customs (perhaps with legal aspects).
The world of literature is full of books in which fictional characters (such as British soldier Richard Sharpe) and fictional organizations (such as the South Essex Battalion) appear at real events (such as the Battle of Waterloo) along with real historical figures (such as the Duke of Wellington) and real organizations (such as the French army). If that was a problem, such books would not be written, or, if they were written, would not be published.
On that basis, I would say that real band names are allowed, as long as what you describe that band as doing does not defame them and is more or less consistent with what they actually did.
There is also a fiction genre called Alternative History, which explores what might have happened if history had gone differently. For example, such a book might explore what might have happened if the South had won the U.S. Civil War. In that case, the book might discuss how President Lincoln retired to Illinois in disgrace. He didn't really do that, of course, but if the South had won, then John Wilkes Booth would have had no reason to kill him. That sort of fiction is also popular. It often mentions people who are more recent than Lincoln.
You can see any book of historical fiction for the sort of disclaimer that authors (or publishers) usually put at the beginning of the book to stay out of legal trouble.