I thought I had a good understanding of the difference between "postpone" and "cancel," but lately I've seen officials using postpone instead of cancel, perhaps to soften the blow of cancelling a fun event. One city hosts a Blues Festival every year during the same month. The announcement said the festival was postponed until 2021. But since they were planning on having a festival in 2021 regardless, wouldn't it be proper to say the 2020 festival was cancelled? Thanks
If the announcements of this year's festival referred to it as something like the 2020 XYZ Festival, and if not much else is known about what it would have been like, then it is indeed wrong to say that it has been postponed. Whatever takes place in 2021 definitely won't be the 2020 festival; that one has been cancelled and it will never take place.
However, if the festivals are numbered, and this year's one would have been known as, say, the 17th XYZ Festival, the organisers can argue that their use of postpone is justified, on the ground that this particular festival, the seventeenth one, will take place a year later. On this line of reasoning, nothing has been cancelled, because all the festivals in the sequence (16th, 17th, 18th, etc.) will still take place.
It is also potentially relevant whether definite plans for the content of this year's festival were made. For example, it may have been decided and announced that the festival would feature particular artists or that it would have a specific theme. If it is now expected that the 2021 festival will proceed according to the plans that were made for this year's one, the organisers can argue that the use of the word postpone is justified, on the ground that the festival with these artists or that theme will still take place, only later.
It is also possible that some tickets for the festival have already been sold and that the ticket-holders who don't seek a refund will be able to use them next year. That may give the organisers the ground to argue that the festival for which the tickets have been issued hasn't been cancelled, but only postponed.
These arguments may have some force in at least some cases of this kind. One may, however, have a sense that they have a certain legalistic air about them, and that they are somewhat disingenuous. The real motivation for using the word postpone is probably the one suggested in the question itself: to soften the blow of the cancellation. While one may argue that this is an abuse of language, compared to other abuses that are common in advertising, it is a relatively mild one.