The Balloons are first heard about when Officer Mooney recieves a call from a man who claims his wife was taken away by one. They are later seen by Mike Tobacco and The Terenzi Brothers, aboard the Klown's Cotton Candy Cocoon, Balloon-Holding Vacuum Cleaner when they watch them scoop up cocooned victims and shoot a stray man. Debbie Stone is later captured in one and taken to The Big Top. Where she is held along with other similar sized balloons, in the storage room that contains the cacoons and popcorn offspring. Dave Hanson then frees Debbie, but could not save everyone else trapped, after he destroys the ship.
The Balloons are fired out The Balloon Ray Gun. Unlike the Cotton Candy Cocoon Guns, which kill a human once hit; These guns are intended for capturing live Humans. Once captured the human is alive but unable to breathe due to the air tight seal. It is unknown how durable the Balloon is, but it's weak against gunfire causing it to pop like a norma balloon.
While it is most likely an error in filming. The Balloon holding Debbie is smaller when the clown takes her to the big top. However it could also mean that the occupant is shrunk down for portable movement.
As for why it was necessary to capture humans alive, that is unknown for now save for a few theories. The most popular being that the victims were to be turned into Klowns for reproductive purposes.