I think these parents have no idea what they're asking for. These kids are too young -- this isn't sleeping over at some cousin's house they've slept at since they were tiny; it isn't even auntie's house; it's a stranger's house and the parents will end up calling folks to come pick up their overtired, over-excited or upset kids in the night.
Especially having a sleepover AFTER a party is just asking for over-sugared, over-excited kids who will end up in arguments with each other or wanting to go home. It also sets up kids to feel like "I didn't get to stay, why didn't I get to stay when other boys got to stay?!" for kids whose parents take them home after the party.
I would avoid the sleepover and prepare your son in advance for the idea that he is not sleeping over. If he's the type to get upset or angry when he leaves while others are staying (and the boys WILL discuss who is staying and who isn't), then have something distracting for him to do immediately after the party, even if it's just watching a video he hasn't seen in a while.
The sweet spot for sleepovers is different for each child so there is no magic age when things are dandy. In this case it's a well-meant but bad idea.