I'm not certain that balloon in the picture isn't an observation balloon (I may be 100% wrong on that) but my first thought on reading your description was that they maybe 'barrage balloons', which were a form of air defence used during WW1/2.

Essentially if you want to defend a particular area from aerial attack, you get some heavy cables and attach them to a series of balloons which then serve as floating anchors (for the cables). If an enemy aircraft gets too close, there is a high risk that they will catch a wing on one of the cables and crash.

note: barrage balloons are only useful when defending against low level attacks due to the length/weight of the cable required to defend at higher altitudes etc.

I'm fairly sure that is a German Parseval-Siegsfeld observation balloon, and they were indeed used primarily for artillery spotting (you can see the squarish basket hanging below the balloon).

They weren't that vulnerable as they were usually deployed well enough to the rear as to be beyond the effective range of enemy fire.

They could be shot down by enemy aircraft but they were usually stoutly defended by batteries of machine guns and anti-aircraft artillery. Attacking observation balloons was therefore not a popular job.

Observers were also equipped with primitive parachutes from very early on, meaning the could 'bail out' if enemy aircraft hoved into view.