Balanced vs Unbalanced

Unbalanced

At the start, the Hot (Tip) carries the original signal and Earth (Sleeve) acts like a screen (rather like a TV area cable, it tries to stop signals from escaping and also tries to prevent hums and spikes from getting onto the signal (Hot).

This system works ok for short cable runs as long as you keep it at least 30cm from any main cables. 

Balanced

At the start Hot (Pin 2) carries the usable signal and Cold (Pin 3) carries the reverse signal. The earth (Pin 1) carries a reference voltage of 0 volts.

At the destination, Cold is again reversed and then combined with Hot. Any spikes and hums that are picked up on the way are canceled out and the original signal remains clean.

As you can see the spikes and hum are also reversed when they enter the input of the unit, which means that the only signal that is out of phase will be the spikes and hum.

The reference 0 voltage is very important as if the voltage at the end of the cable is different from that at the start. When the reverse signal is combined with the original not all of the spikes and hum will be removed.

If you have a lot of equipment it is easier for the 0 voltage to increase as earth leakage begins. The use of StarEarthing is then crucial to ensure every peace of equipment is ground to earth to ensure 0 volts is consistent throughout the installation.