Depends on the serial being conducted - most large scale exercises generally have some live-fire element at some point. As far as spectators go you often get higher-ranks, politicians, industry representatives etc observing some of the more exciting serials (i.e the ones with stuff that goes bang!).
Not totally surprised it happened - training with live ordinance isn't done as much as it should be, even just having it fitted to the aircraft makes a difference and adds another layer of complexity and from what I've heard the Russians struggle even more than NATO forces do with flying hours, maintaining currencies, operating tactically in large formations etc so you might well have a perfect storm of crews not as current on type as would be ideal, doing something which is more complex than they are used to and with the potential pressure of needing to be seen to perform for the hierarchy.
Not that we (NATO) are much better, negligent discharges from ships and aircraft whilst not common, are not totally unheard of...
