Different games and gamers define balance in different ways.
Some games make disadvantages/drawbacks to gain extra points to spend on making a character more powerful, the theory being that the drawbacks are negatives that balance out the extras the character gets. In some cases (such as Deadlands), the drawbacks are also useful for getting extra experience for roleplaying.
Other games consider drawbacks to be an essential part of the character, and require or strongly encourage the character to have some negative trait(s).
Still others allow drawbacks, but require you to spend points to gain them (Burning Wheel, for example). The theory being that the drawback allows you to bring the narrative focus towards your character more often.
I think that how balanced a game needs to be depends on the players. It is almost never fun (i.e. I have never met anyone that said they would enjoy it) to play a useless character. If another character can do everything that your character can do, only better, then the game won't be fun for you. When people talk about classes being balanced, what they usually mean is that they want some kind of niche protection, something that their character can do that no one else's character can, or at least something that they are clearly better at than the other characters.
It is also important to most people that their character's niche actually be something useful. It is rare to find someone who is happy with their character who can't fight at all and has no skill other than incredible cooking skill, particularly if cooking only comes up as roleplaying when everyone thanks them for the awesome meals.
Balance really depends a lot on what kind of game it is and what kind of players are in it. The tone of the game and the types of challenges faced has a huge impact on which character archetypes are the most useful and powerful, and you cannot meaningfully discuss balance outside of that context.