I am only interested in discussing the actual laws

But you can't know the laws if you don't study reality. You can only know what you read, and believe they are laws. Even in the latter case, you can't seriously be so foolish to believe that you know all laws as a result of having read a few books!

If you must think about it this way, and it helps, then although it is untrue - go ahead! Consider "my law" to be brand new, established only by me, and in no books. It is being published right here and right now, in this conversation. How can you possibly be sure that the law is incorrect, especially considering that you utterly fail to find any fault in it and cannot provide any measurement (your own or anyone esles) which contradicts it? Please attempt to answer this rhetorical question if you can.

In the second, the container is merely preventing the gas from expanding further

They are two views of the same thing, and are certainly not mutually exclusive. You can conceptualize and model either or both of them and still be consistent with what we observe. Useful is not the same as correct!

However, if I were to squeeze the balloon, now the container is exerting pressure (through me) on the gas inside.

True, but surely this does not preclude the pressure the gas itself exerts in trying to expand the confines of the balloon.

Wether you conceptualize the walls to be causing the pressure, the gas within, or a combination of both makes little difference. Surely you have encountered this newtonian relativism before? Centripetal vs centrifugal?

The key difference is the density of gas is less, allowing it to expand upward. as well as across.

The gas has no trouble expanding at any density, nor greater ease at a lower density. Its expansion is merely a property of that state of matter - regardless of its density.

What prevents the gas at the top from expanding all the way outward?

The container walls! I expect you mean - "what prevents the gas from expanding and diffusing isotropically through the entire container" and although there are many answers and potential frameworks/conceptualizations to answer that, the core answer is the weight of the gas itself.

The gas sits on the gas beneath it (all of that gas attempting to expand), which is what causes the gradient. The weight of the gas ultimately exceeds the expansion force.