To further elaborate on what a balanced line does:
Take, for example, a standard three-prong XLR cable. One is ground and the other two are positive and negative, also called hot and cold. At the point of input, say a Shure SM58 microphone, the hot and cold lines are placed 180 degrees out of sync, so that, were they to be placed together again, they would create destructive interference:
_ _ _
/ \ / \ /
/ \ / \ / Hot
/ \ / \ /
/ \_/ \_/
+ = ------------------
_ _
\ / \ / \
\ / \ / \ Cold
\ / \ / \
\_/ \_/ \_
If the line picks up any interference, or noise on its way to, say, a standard Peavey pre-amp, that interference is in the same phase in both the hot and cold lines, so it creates constructive interference:
_ _ _
/ \ / \ /
/ \ / \ / Hot _ _ _ _ _
/ \ / \ / / \_/ \_/ \_/ \_/
/ \_/ \_/ interference
_ _ _
+ = / \ / \ /
_ _ / \ / \ /
\ / \ / \ \_/ \_/
\ / \ / \ Cold _ _ _ _ _ unwanted interference
\ / \ / \ / \_/ \_/ \_/ \_/
\_/ \_/ \_ interference
What the preamp does is shift the cold and hot lines 180 degrees a second time so that now the audio signal amplifies itself and the unwanted interference cancels itself out:
_ _ _
/ \ / \ /
/ \ / \ / Hot _ _ _ _ _ __ __ __
/ \ / \ / / \_/ \_/ \_/ \_/ / \ / \ /
/ \_/ \_/ interference / \ / \ /
/ \ / \ /
+ = / \ / \ /
_ _ _ / \ / \ /
/ \ / \ / / \ / \ /
/ \ / \ / Cold _ _ _ _ / \ / \ /
/ \ / \ / \_/ \_/ \_/ \_/ \_ / \__/ \__/
/ \_/ \_/ interference Pure signal!
[Editor's Note, 2/21/2005: Removed unsightly excess whitespace inside the <pre> tags. Removed <br> tags and added <p> tags.]