Fascinating question, I've frequently wondered about it.
Overconfidence
First, colonial armies generally won their encounters but also traditionally discounted the capabilities of their non-Western adversaries. Whether that was purely due to racism or a more reasoned look at the track record, you were still left with events that ran against the grain, where a skilled adversary could win due to sloppiness and overconfidence: Little Big Horn, Singapore and Hong Kong vs the Japanese, Tsushima, etc...
So that would be a big factor, IMHO.
Dien Bien Phu : history of a battle that changed history (in French)
La France a gravement sous-estimé la capacité du Viet Minh à surmonter les défis logistiques et à mobiliser une force capable de transporter artillerie lourde et équipements à travers les montagnes.
France seriously underestimated the Viet Minh's (VM) capacity to overcome logistical issues and mobilize a force capable of transporting heavy artillery and equipment through mountains.
To which you can add that Dien Ben Phu is surrounded by hostile territory, as far as France is concerned, so that's also a bit cavalier to use it as a base.
But mere underestimation might also not be the entire story...
A fundamental change in Viet Minh capabilities over time.
70 years later, why did Dien Ben Phu take place? (in French)
Summarizing
By 1953 France is looking for a way out of this war, but wants to leave with its head high.
Regionally, Dien Ben Phu is the only area where a landing strip can be set up. France will, per le "Plan Navarre", use it to root and hold and then radiate out from that secure base to block access to Laos. Yes, there are hills and yes, the VM control the surrounding area, but...
Both armies field forces of variable quality. France has 450k, sometimes iffy infantry, but good equipment. VM has 400k, battle hardened, but somewhat lightly armed and half are militias. VM, at this point, has limited heavy equipment, artillery and capacity to sustain heavy combat. It is a guerrilla force, and a good one, but not ideal for pitched battles. As per Operation Castor to seize it, Dien Ben Phu is an anvil they will shatter on and the French troops there are the cream of the crop. This may not be that bad an idea, at that point in time.
This is about to change. The Geneva Conference of 1954, to end the Korean War, has just been agreed to, with a rider attaching "resolving issues in Vietnam". China and the VM see the opportunity, pump massive amounts of materiel into the VM and make Dien Ben Phu the primary target. This is to ensure stronger negotiating positions in Geneva.
An international event soon changed everything. On February 18, the announcement of a conference to be held in Geneva in April, intended to address the situation in Korea and also to study the "problem of restoring peace in Indochina," dispelled Giap's last hesitations. He fully intended to arrive at the negotiating table with a major advantage: the fall of Dien Bien Phu—whatever the cost. From then on, China would no longer hesitate to provide aid, and French intelligence noted a considerable increase in the supply of ammunition and various equipment.
Dien Ben Phu: strategic mistake or good idea that went bad? (in French)
The superiority of artillery is the final determining factor. Nasan demonstrated that the system of multiple strongpoints mutually protecting each other annihilated even the most powerful Viet Minh charges. However, the Dien Bien Phu area is much larger than Nasan's, and most of these strongpoints will not be able to support each other. [24] (Thus, the Isabelle command post will remain separated from the rest of the group until the very end.)
The second major error will be the underestimation of the enemy:
The French believe that the enemy has no artillery or will not be able to deploy it, but in fact, the enemy already possesses these capabilities;
So you need to look at the sequencing of events and the escalation from a operationally significant theatre to a major military target motivated by political considerations at the highest level. France wasn't initially facing an enemy which had been fielding lots of artillery. That changed as the battle became more important to the VM and China.
Timeline
September–October 1953 — Operational for Castor planning begins
November 1953 — First major proposal for the Geneva Peace conference by the USSR.
November 20–22, 1953 — Operation Castor carried out
March 13th, 1954 - Battle of Dien Ben Phu starts
May 7th, surrender of the French troops.
Conclusion
Contrary to a persistent legend that offers a compelling narrative, there was no "trap" at Dien Bien Phu – neither on one side nor the other. The battle and its outcome were simply the result of political choices and the adaptation of the two adversaries' plans.
Here's a pretty good look at the tactical aspects Dien Ben Phu - Why France Lost this legendary battle Le Monde @ YouTube
And here's a Google Map link to that location, just put on the Terrain Layer to get an idea of why this location could have been foreseen to be problematic by worst-case military planners.
(of course they thought about it)
At the end of this first night of fighting, the French suddenly realized that, against all expectations, the Viet Minh had been able to bring and camouflage around the camp a significant number of 105 mm caliber artillery pieces, whereas the 2nd bureau of the French general staff thought that at worst they could only bring light pieces, of 75 caliber at most.
..
The choice of Dien Bien Phu was not unwise from a strategic point of view, situated as it was at the crossroads of foot and horse trails leading to Laos. Giap himself wrote in his book on the battle that the decision to establish a foothold on this plain was the right one and that he only won because the French command grossly underestimated the Viet Minh troops. Tactically, the airstrip allowed for massive resupply via airlift from Hanoi. Occupying this position deprived the Viet Minh of food supplies, since the entire plain was agricultural land.
For French strategists, the Vietnamese People's Army would be unable to bring heavy artillery due to the rugged, muddy terrain around the valley and the lack of passable roads. On the other hand, the topography was considered favorable to the defenders; high hills surrounding the basin would prevent the enemy from using its artillery: it would either have to fire from the reverse slope (the side hidden from the garrison) but with a steep trajectory and therefore limited range, making it impossible to hit the targets, or fire from the descending slope, in full view of the garrison, which would expose it to French counter-battery fire. Giap had chosen this second option.
Furthermore, such artillery would only have a small quantity of ammunition, supplied by a logistics system considered weak, as it was based on infantry. The risk of enemy artillery was indeed taken into account by the French, but deemed technically unrealistic. From a purely military point of view, the Viet Minh's ability to use artillery was doubted.
...
And how things ended up working for the VM instead:
It was relatively easy to direct fire against the garrison, since the Viet Minh positions overlooked the entrenched camp. The infantry fighting was primarily intended to maintain pressure and demoralize the garrison defenders, who lost the initiative as soon as the first artillery fire hit.
