My take: First look is testing concept of matter and matter takes up space (and has weight – not tested).
Observation 1: The balloon expands.
Explanation 1: Air is a matter which takes up space when pumped into the balloon, causing it to expand.
Observsation 2: Some water in the beaker overflowed (or is displaced) into the trough.
Explanation 2: The bigger balloon (with more air inside) takes up more space in the water and caused water to overflow.
I feel the concept of materials and their qualities may not be relevant. Since the cause of the expansion of the balloon is the air (which is matter and takes up space) being pump into it, not directly because it is elastic. Any expert can advise? Appreciate any inputs so I can guide my child too. It is hard for me to guess what setter is looking for in science questions…