Regarding the Balrog shown at the end of the episode, I'd guess that it will be confronted (likely with help from the elves or perhaps from the Stranger, perhaps that's how Sauron get's into the good graces of everyone) and pushed deeper and sealed in mountain, allowing the mine we saw in this episode (and in Fellowship) to be opened. Millenia later, when those mines are exhausted, the Dwarves begin looking for a new vein, go too deep, and bring about the end of their kingdom.
Regarding the timeline of the 2nd age in general, it appears that much is being compressed into 10-20 years that we'll see in the show (based on the current age of Isilldur, if nothing else). If I had to guess, we'll see the forging of the rings next season, a 'golden age' of the rings in the third (where elves, dwarves and humans all create great works in a short time with the power of their rings), Sauron's deception revealed in the 4th, and the last alliance of elves and men fighting Sauron in the 5th. It's a story inspired by Tolkien and meant as a prequel to the films.
Finally, I love what this show is doing (again, I don't have any Similarian background and have only ever read the novels once) and have been massively enjoying it. It's using the medium well and the storytelling is wonderfully functional in a way that a lot of modern shows have forgotten how to do. I know who the characters are, as well as what they want and what is in conflict in any given scene.