The balloon is a type of building block. You can find it in the Industrial section of your inventory, where it looks like a canvas ball with netting draped over it. Each balloon block occupies one square block and has player and mob collision. Balloon blocks will stop rain, but cannot hold liquids. Like glass blocks, balloon blocks have rounded edges that adjust based on contiguous placement. Like ice and a few other types of blocks, balloons are extremely easy to mine on Mac and iOS devices. (Sorry PC users: you have to hold the pick on them for much longer!)
How to Obtain
As of January 2016, balloons don't generate naturally, so in order to obtain them you must either craft them in the Industrial section of crafting, or trade for them in a market world.
How to Use
People often use balloons above builds in the sky to create steampunky airships. Due to how easy they are to mine, they're also a useful block for putting up a temporary ceiling to prevent acid or lava rain from reaching players on the surface.
To see some amazing builds using balloons, check out the Airship Competition worlds.