What exactly does balancing lipo batteries do?

It balances the individual cells within the pack so they're the same voltage.

The Why of balancing: To prevent a higher voltage cell being overcharged and going into thermal runaway, toxic corrosive very smelly smoke and intense fire. Not so good.

Some suggest balancing is not needed, perhaps so if one is very diligent about checking cell voltages. But lipo cells change with cycling and age, the risk is not realizing balancing is needed until it is too late.

Some suggest balance charging is slower than a regular charge, not true at least with good balance chargers.

It is almost always a mistake to balance a discharged pack. At best causes more balancing time when charging. At worst abuses cells since they don't like being discharged too far, why take them lower.

Do you have to balance the battery before you charge it? Or can you go a few days-a week without balancing and be fine?

The safest way is to always balance while charging. Most all modern chargers balance while charging by default. Just hook up the main wires and the balance plug and start charging.

Really no need to ever just balance a battery. It is a waste of time to balance before charging.

I remember when balancing became all the rage a few years ago, and having a battery manufacturer telling me it was overrated.
So last year I bought a pack for one of my cars I only used for practice - so it tended to get abused and misused, and run a lot compared to my race packs - and as an experiment I decided to never balance it and see what happened.
After a full year, and dozens and dozens of charges, I charged it up as I normally would at the track (no balance adapter) and then plugged it into my balance meter - and the cells read within 0.10 volts of each other.

I have the traxxas ez peak plus charger with the lcd display. Would that balance while I charge?

Understood. Can you assure us that will be the case for every pack, at every charge rate, with every user, for as long as they try to use the lipo?

Is it a balance charger?
Are you expecting us to look it up for you.

No offense dude, but you're posting all kinds of questions here the last few days and most of the info you should or could easily look up yourself.

Of course not. Was just giving an example.

I've seen and smelled a few of those examples that didn't turn out so swell. Not sure if everyone understands how toxic and corrosive that smoke is, or how intense the fire can be.

Someone experienced and knowledgeable with lipos with a good quality new pack is one thing. As I think I alluded to immediately after the portion you underlined. I’m also aware lipo packs existed and were used well before balancers were even available.

I just don't think it is unreasonable to recommend to someone starting out with lipos, who doesn't even know what balancing is or likely how to check it, with packs of unknown quality or age (some guys buy used packs) to take what I view as a simple and hardly burdensome safety precaution. That's all.

Well, if he's going to rely on buying used packs no amount of balancing in the world is going to fix them or make them safer to use.
Don't get me wrong, I'm not advocating not balancing. But sometimes it seems like some people think balancing is the answer to everything, and it's not. That's all.

Wrong. I always balance charge, but for those that do both, know that strait charging is faster. balancing is done by draining high cells as needed during charging, and that takes time, period. Who told you that?

Mostly from my own testing, primarily with Hyperion chargers. I've tried it several times over the years. I consistently get similar if not slightly quicker balance charges than without. Granted, this is with good packs that don't require much balancing so perhaps this result isn't surprising.

The case where significant balancing is required, seems to be the case where balance charging is most appropriate.

What time differences are you seeing, and with what charger?

If it has the white multi pin connector on the right side, then yes it should. Just needs to be hooked up correctly and in the proper lipo mode. Most modern lipo chargers balance charge by default.

The chargers I have give a warning on screen and require an extra button push to charge in lipo mode without balancing. As far as I know most chargers are similar in that aspect

.1? Or .01? There's a huge difference there.

If my packs showed the difference between 4.01 and 4.11, that's a HUGE problem. Mine always balance within .01 of each other. Always shows something like 4.17/4.18 or whatever voltage it is at that particular moment.

I've never seen a 2s+ lipo that has a .1 variance in voltages between cells.