A Balloon is an item added by Mekanism. It can be used to levitate non-player entities about one block off the ground and holds them in place. In order to place a Balloon on an entity, right-click on it while sneaking. When used on a player it allows the player to feather-fall while jumping. In order to remove the Balloon simply left-click on it to destroy it.
While a non-player entity is floating with a Balloon they can be moved around by simply running into them. This is a very easy form of corralling animals around.
The color of the Balloon can be changed by using another dye in place of the Bone Meal.
Additionally, the Balloon can be changed colour by placing the Balloon and a dye in a Crafting Table.