RCA vs XLR and Balanced vs Unbalanced

Newbee needs some help understanding the benefits (if any) of using RCA vs XLR connections and using a balanced vs unbalanced components. What are the benefits of using balanced components (DAC > pre-amp >  amp)?   Does balanced sound better for some reason?    It is my understanding that to take advantage of a balanced system, you need to use XLR cables. Correct?  RCA cables will negate the benefits of a balanced system?  For example, if I have a set of cables that are terminated with XLRs on the DAC end and RCAs on the pre-amp end.  If I have a balanced DAC should I be using a balanced pre-amp? A balanced amp? As my line of questioning indicates, I have no understanding of how a balanced system works and why it is preferable to a non-balanced system. Any guidance will be greatly appreciated. Cheers.