1 - Refers to when your mind is filled with too many
random things and preoccupations, and your thoughts get incoherent, hence making you a balloon-head. Gets it's sense as being a metaphor for a balloon, which is
always full and big, but always filled with
nothing.
2 - Can also be used as an insult, in a similar sense to "empty-minded" or "thoughtless".
• I've got such a
balloon-head today. Didn't sleep well, and the tests are next weekend.
• She's such a balloon-head. Her boyfriend goes on dates with her
brother, and still, she
always finds reasons to forgive him.