Balcón vs. terraza
In Spanish, both balcón and terraza refer to outdoor spaces connected to a building, but they differ significantly in size, location, and structure.
Balcón
A2A balcón is a platform that projects from the wall of a building on an upper floor, enclosed by a railing or wall. It is typically small and is an extension of a specific room like a bedroom or living room.
Salí al balcón a tomar un poco de aire fresco.
(I went out onto the balcony to get some fresh air.)
El apartamento tiene un pequeño balcón con vistas a la calle.
(The apartment has a small balcony overlooking the street.)
Desde nuestro balcón del hotel podíamos ver el mar.
(From our hotel balcony we could see the sea.)
Colgó unas macetas de flores en la barandilla del balcón.
(She hung some flower pots on the balcony railing.)
La puerta que da al balcón está en el dormitorio principal.
(The door to the balcony is in the master bedroom.)
Terraza
A2A terraza is a larger, open-air area. It can be on the roof of a building (also called an azotea), a large set-back area on an upper floor, or even a paved area on the ground level adjoining a house, bar, or restaurant.
Organizamos una fiesta en la terraza del edificio.
(We organized a party on the building's rooftop terrace.)
El ático tiene una terraza enorme con una piscina pequeña.
(The penthouse has a huge terrace with a small pool.)
Vamos a tomar un café en la terraza de ese bar.
(Let's go have a coffee on that bar's terrace.)
Cenamos en la terraza para disfrutar de la noche de verano.
(We had dinner on the terrace to enjoy the summer night.)
La casa tiene una bonita terraza que da al jardín.
(The house has a beautiful terrace that opens onto the garden.)
Summary
The main difference is size and placement. A balcón is a small, projecting platform attached to a specific room on an upper floor. A terraza is a much larger open space, which can be on a building's roof, a large upper-floor patio, or even on the ground floor next to a building. Essentially, all balconies are small, but not all terraces are large; a terraza can be any size, but it's typically a flat, open area, whereas a balcón specifically juts out from a building's facade.