Blue printing is building the engine to exact design (blue print) specs, as close to +/- 0.0 tolerance as you can afford. This can be very expensive. How many pistons do you need to measure before you find 6 that are Y.YY inches? Next part, repeat.
Most "blue printed" engines are not truly blue printed; they are built so each piston is the same as the others etc...
Balancing is just what it sounds like. Crank, flexplate, harmonic damper as an assembly has the rotational axis and center of gravity matched. (0.5gram or less is what most shops shoot for.)
Connecting rods are weight matched as a whole and end to end. The end to end is the most important one; it gives them the same rotational center.
Pistons are weight matched with pins and rings.
Then heavy piston is matched to light rod etc...
Most factory engines are balanced adequately for ~6000 - 7000 rpm.
Balancing will make the engine feel smoother but is not needed unless you are going to spin it over 7000 rpm.
Blue printing will also make the engine feel smoother because each cylinder is producing the same amount of power.
Blue printing is generally not worth the expense until you reach the level where <0.001 second makes a difference in your pay check.
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