What is "Security Theater"? Does it exist and if so, who benefits from it? What are the three variables described in the Schneier video

What is "Security Theater"? Does it exist and if so, who benefits from it? What are the three variables described in the Schneier video

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Question #1: 

What is "Security Theater"? Does it exist and if so, who benefits from it? What are the three variables described in the Schneier video and how do they interact with one another? Does this apply to Network Security and Privacy? How so?

Question #2

Is it ever ethical to crack digital rights management tools and why?