What people are talking about when they say balanced is the rotating assembly of the engine which is the crankshaft, connecting rod and piston.
These china girl engines are known to have untrue/unbalanced cranks some better than others but most will buzz like crazy at wide open throttle, Duane at thatsdax sells an advertised engine that has had the crankshaft trued and balanced better than what you will likely find with any of the engines out of the box, I just got one of them together a couple days ago myself but haven't run it yet so I cant say how much smoother it actually is but any at all will be a welcome amount considering how most of them run out of the box at high rpms.
In my opinion you cant go wrong with that dax engine, he stands behind his stuff as good as any and better than many, and if he says the cranks are trued and better balance I believe it.
So to some it all up here when you see someone speaking of a balanced engine they are talking about the crank assembly.
Hope this clears it up for ya.