Defcon and Blackhat were founded by the same dude. Why didn't they exclude feds from BlackHat as well? Guessing it was probably because that is their big money maker with all the corp/fed support.

BlackHat is a more "professional" event for the security industry. People that ostensibly work in the security industry go there just like people go to o'reilly conferences for various technical areas.

DEFCON is a community event for anybody and is totally anonymous (entry fee is only payable by cash in person) and has a more freewheeling, community feel.