They DO recognize the buttons. You see a couple of them specifically recognize the ‘PLAY’ symbol on them. That’s not the issue they’re clearly having: there’s no FEEDBACK to the buttons. They press them and nothing happens. A couple clearly don’t realize they have to push the button in far enough to have it lock in position, in particular. Part of the point here is that we assume a whole set of circumstances from experience they don’t have. There is no screen, no visual information or anything to inform them of what the device is doing.
My own kids understand intellectually the idea of 8-tracks and cassette tapes, for example, but the actual use of them is not as intuitive as you might think, if you hadn’t used them for years and grown with the technology. Even the assumption that I see some people have that OBVIOUSLY they would know it would HAVE to have headphones is coming to the exercise with assumptions the kids don’t all have. A 10 year-old wouldn’t know that the device HAS to have headphones to work and has no speakers of its own, since the iPhone has been able to do that since 2007 and some MP3 players could do that before that (though rare).
They were kind of cheating by not giving them the headphones right up front, but that was to highlight that assumption, I think.