Until I started doing these festivals, I was clueless about how artists were chosen to participate. Basically, you must apply months ahead of time by filling out an application, submitting a specified number of photos of your work and display, and usually a small application fee ($15-$30).
Your work is then juried by a panel of people (usually artists), and at some point they notify you if you were accepted or not. If you got in, there is a booth rental fee. I've paid anywhere from $50 to $400. This fee is usually for a 10x10 space. Sometimes there are additional costs involved if you need tables, electricity, etc.
I have found that it is better to do these juried shows than anything else. It kind of helps level the playing field by including art of similar quality. The jury process is also in place to make sure that the art included is created by the artist and not mass produced.