The important thing in the balloon analogy isn’t what the balloon is expanding into, it’s just that every point on the balloon is drifting away from every other point.
One thing to consider, though, is that space may not even be a real physical thing. Maybe location is just a property of things, like mass or electrical charge. It could just be an inherent value that adjusts and influences other things according to the laws of physics. Maybe it’s less that “space is expanding” and just that “the location property of everything is constantly diverging.” There’s no need to worry about what anything is expanding into because our conception of space may just be a mental construct.
The observable universe is constantly expanding as the passage of time allows light to reach us from more and more distant parts of the universe. So it’s less “we don’t know what’s outside” and more like (to a certain extent) “we have to wait and see.” And there’s nothing we’ve seen to indicate that these external regions that are being revealed are anything but more of the same kinds of things in our inner region of the observable universe.