I wax philosophical in this post - and definitely drift a bit far from the main topic and express at least one opinion that some may strongly disagree with.
Read on at your peril. Whether you agree or disagree all comments are welcome. Just remember - attack the statement not the person.
I believe that Crimson Kaim has articulated almost perfectly how the majority of gamers concerned with balance would define it.

My only caveat is that the statement implies that the sum of the + and - equals zero. If that isn't the case then what follows is all based on a false premise on my part. Kind'a would make the whole rest of this post irrelevant.
And why would one ever want to achieve "absolute balance"?
That's what I cannot understand.
For every plus there is a minus? Hardly. Not the way the universe works and it shouldn't be the standard for games either. If I'm in the woods and run into a hungry bear without my trusty Win 94 lever gun or my .44 Mag S&W Model 29 on my hip I am not gonna stand and fight that bear. I'm gonna go low profile and slink away or run like hell. Because that confrontation is
completely out of balance. If I'm flyin' around in ED with my Cobra Mk 3 and I run into an Anaconda I don't give a tinker's dam if the Cobra has every single A rated module engineered to G5 and all the best G5 weapons it can mount - I'm haulin' a.ss! With absolute balance as defined by Crimson that Cobra should have as a good a chance of defeating that Anaconda as the Anaconda would have of beating the Cobra; which is about as unrealistic as it gets. It'd take an absolute boob flyin' the 'conda to get beaten by the Cobra and in the 4 years I've been playing ED and reading this forum I can say that the ED community is on average significantly more literate, intelligent and clever than the internet norm. No boob.s here! (heh heh, he said boob.s).
Because contrary to what Thomas Jefferson said: we are not all created equal (he probably meant equal opportunity but most of the uneducated masses read it literally - <sigh>). Some of us are clearly smarter than others, some clearly stronger, faster. Some better looking, some cleverer. We're all different and thank the lord for that.
How so very boring would life be if we were all the same? Where would be the challenge - the challenge that has driven mankind to the heights it has currently achieved. Pretty dam boring if you ask me.(no one did - ask me - but I'm oratin' on it anyway). And if we were all the same we'd probably still be living in caves or hootin' and hollerin' while flinging our poo at each other.
Some may argue for example that strong and smart offset each other. Nah. Smart will overcome strong in the long term every time. Pretty will offset ugly everytime and there are studies that prove it. The examples go on. Plus and minus don't always add up to zero.
Then why should our games be balanced? Why? in life we aren't all equal and that is the variety, the diversity and ultimately the spice of life which makes it worth fighting thru to the end. Some will lose, some will win. We aren't all equal which is demonstrably true and equal opportunity though strived for will probably never be achieved simply because we are not equal. Why don't games reflect that. Who are the devs trying to convince?
AND IMO our games should be built to reflect the diversity and differences that human beings have and pretend to celebrate. Balance is boring, it's unnatural, it dumbs us all down and it has already - play wargames from the 80's, 90's and forward - and if one has played wargames for as long as I one will have seen that wargames have been dumbed down significantly since the masses starting buying computers in the early 90's big time - there's a few exceptions but not many IMO.
Balance is INSULTING!
BUT - I'm realistic enough to know that balance as defined by Crimson is probably never gonna go away as a game dev goal. Game developer's don't make games for free so they pander to the masses and I don't really blame 'em since I'm a pretty hard core capitalist.