How do you buy things with your Paypal balance?

When you buy something and use the "pay now" button to pay with PayPal, the next page you will see shows the PayPal logo along with several credit card logos. This doesn't mean that you have to pay by card, it's just showing that you can if you want.

Select the PayPal option and you will be re-directed to PayPal where you can log in and make the payment from your balance there.