Please pardon the provocative title. There is a bit of debate about what exactly is game balance. Balance is a subjective assessment, similar to fun, but while balance may be subjective, there are concrete measurements that can be applied to determine how closely a design aligns to that subjective goal. In a word: metrics . For myself, I want a player to feel like their skill and perhaps some luck, contributed to their victory or defeat. I hate the feeling of realizing that something in a game is even moderately unbalanced. If the game is severely unbalanced, it reduces the game to an activity. For example, if a game has players select from unique abilities at the start (like a faction), but you realize that your faction is unbalanced, the game is no longer about skill and luck, but rather the choice you make at the beginning of the game. In which case, why play the rest of the game?
Games, Design and Play (by Colleen Macklin and John Sharp) is a solid practical book that lays out an iterative design process. While it focuses on video game development, more than 90% of the material applies to game design in general (product design to a degree). This book is a fairly quick read and full of practical advice.