A balloon is a kind of aircraft that stays in the sky by floating. People fly in balloons mostly for fun.
A balloon is different from an airship. An airship is a floating aircraft that has an engine and can change its direction of movement. A balloon has no engine and has no way to change its direction of movement (except up and down). A balloon travels by moving with the wind.
The bottom of the balloon is called the "basket" where people can sit or stand.
The top of a balloon is a big cloth bag called the "envelope".