The speaker spots a blue balloon caught in a yellow tree and starts talking to it, calling it "Mr. Balloonman." The scene is simple and a little sad: the balloon seems to want to escape, but the branches hold it. The speaker enjoys how the blue looks against the yellow, yet keeps coming back to the same question, "is it true?", as if hoping the balloon will explain itself.
The speaker wonders how it ended up there. Maybe it was left over from a party, or maybe a child simply couldn't keep hold of it. The line "For sure it tried hardly" suggests some sympathy for that child, or perhaps for the balloon itself. By the last verse, the speaker asks whether it will stay, shining and swinging in the morning air.
The mood is gentle, curious and quietly wistful. The repeated refrain works like a soft, unanswered call, and the playful rhymes keep the tone light even while the image hints at loss and being stuck.