Musicianship hasn't changed - in many ways, there is scope nowadays to be less a traditional musician and more a technologist. Ed Shearan is a very good example. He's a master of the looper pedals and other gizmos, and they are nowhere as simple to operate seamlessly as he makes it look.
One thing that has made it better is monitoring. The Stones and the Beatles had major problems live.They sang and played their instruments and could hear NOTHING. They had no idea if they were in tune or not. Watch a modern band who were around in those times - The Eagles are a good one - you'll see the guitarists constantly checking tuning between songs, or even swapping guitars, with their own guitar techs handing them a fresh one so they don't have to tune. Some are even playing the 60s/70s guitar they had then. If they need tuning now, they needed tuning then - so some of those live shows would have been terribly nasty. Could John Lennon hear what he was playing? I doubt it. I use in-ears, because I like it quiet - but on one gig, the pack broke and I played the entire second half 60s style - no monitors and no sound. Because we sing and play pretty non-stop in every song, I got to the end of one song - and only then looked at my left hand - on the wrong note Ab not A. I had played the entire thing one note lower than it should have been played and it must have sounded crap. Remember the UK entry in Eurovision one year where it was out of tune - it just shows that unless you get the right things in your ears, what comes out your mouth can be very odd. Your mate is half right. We used to play lots of festivals - and the sound for the bands is the worst experience you can get. There is no time at all for sound checks, and often the best you get is what they call a line check - as in when you speak or play - it comes up on the desk, and the audience will be able to hear it. If they stick the drummers voice in your ears, or your floor monitor at deafening volume - what can you do? It looks naff to start asking for more of this, less of this mid set - so you grit your teeth and make the best of it. It takes the front of house guy all of your first song to get a rough balance for the audience and you have no idea at all if that is good or bad - your manager or record company rep will be arranging them if it's not good. All you care about is yourself - and you get to making eye contact with the monitor guy in the wings - pointing at the guitar and pointing up? You get a nod, and if you are lucky, your guitar suddenly perks up and you breath again!
The Stones and the Beatles had nowhere near this level of facilities - so yo learned your bit, walks out and played it, hoping the others did the same. Sometimes it would have gone wrong - badly. The audience loved the overall thing. Some well known musicians were and still are inept. Their fader would be on zero more often than turned up. Didn't and doesn't matter. Watch many big name bands, as a musician yourself and you spot fingers not in the right place, or impossibly long sung phrases with no breaths. Next step is to see if you can watch the drummer starting each song - common for the drummer to be the one to hear in his ears 1,2,3,4 - you can't stick that through the speakers - it kind of gives the game away.
One of the acts we worked with for years was a great show - always rebooked. Audiences always up out of their theatre seats clapping. I asked one of the happy crowd on their way home if they had a good time? Best show ever - brilliant. I asked, what did you think of the drummer? Great, they'd say. There wasn't one. They never had a drummer - the drums and later the bass too were on track. Then to cut money even more, they stuck their tour manager on stage with a pile of broken keyboards and synths and he jumped up and down and sang into an unconnected mic - he had a great time and was always an outrageous mimer to the pre-recorded keys track. Nobody ever noticed. The band even had a sound check track that would be used in the afternoon to fool the theatre staff. It never did of course. You'd sit in the crew room hearing a thump thump thump from a kick drum for a couple of minutes, then realise there was drum kit!
All smoke and magic. The audience don't care.