It's done a few different ways, I don't think the perfect solution has been found yet. DJs or bands have performed as avatars by using full body tracking. More

It's done a few different ways, I don't think the perfect solution has been found yet. DJs or bands have performed as avatars by using full body tracking. More commonly, the performer will have a camera on them and the video is displayed on a screen in the VR event. They can also see what's happening in the event so it's possible for them to interact with the crowd. As headsets become lighter and more comfortable and FBT gets easier with inside out camera tracking or better trackers; performing as an avatar will become more common. The events are usually in environments that look like clubs or concert halls.