The translation "I sit out onto the balcony" sounds very rude in English. It implies that you stick your rump out the door. From all the discussions that have taken place in previous units, I would guess this means "I go sit out on the balcony and read" or "I go out and sit on the balcony and read" or "I go out onto the balcony to sit and read."
You win Duolingo, you have defeated me. I'm throwing in the towel. I give up. Sometimes you want "out onto the balcony". Other times you want "out on the balcony". There is absolutely no logic to it.
For these lessons I prefer "out onto the balcony" even if it sounds a bit awkward because it implies the necessary motion which "out on the balcony" does not. I'm fine with either though, I just want some consistency so that I can actually finish this lesson.