I think there are two different types of "ball busting".
One one hand you have the "character assassaination" that flamingdog described which is, essentially, a bullying that occurs within a group of friends--an event not unlike the playful wrestling of dogs in order to establish the alpha, the beta, and so forth. This is probably the most basic of all our male social rituals.
On the other hand you have a playful banter that replaces "deep" or "emotional" conversations about character flaws that the individuals involved might identify within their friends. It is far easier to "bust your friend's balls" over his choice of clothing or taste in music or eating habits than it is to sit him him down and explain that he has bad taste and looks like an idiot, that the music he listens to is uninspired and is indicative of poor self-education in that specific facet of his life, or that he eats like swine leaning into it's trough.
Obviously it would be much more effective to address this directly with a person but unfortunately most relationships between men are not constructed to handle these type of interactions. Those on the receiving end of this information typically grow defensive and then angry, while those communicating typically deliver it in a condesending manner that makes it difficult to digest.
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