Translation:The Mexican musicians stand out on the square and play music.
Same comment here as my comment about "sit". "Stand" does not like to take prepositions of motion.
Natural sentence ignoring motion: "The Mexican musicians stand out in the square and play music."
Natural sentence including motion: "The Mexicans go stand out in the square and play music."
Uh, that's not what "stand out" means. (At least in English, rather than Hunglish.) English really doesn't work like Hungarian in this respect; the only way to really get across the full meaning of "kiállnak" is to use a whole lot more words: The Mexican musicians go outside to stand in the square and then they play music.