Elderly woman in blue apron balances a basket on her head on a sidewalk while talking to a woman dressed in black.
Elderly woman is balancing something on her head while having a conversation.
A basket is something.  A conversation involves talking.
If you're having a conversation, you must be talking to someone.
"Balancing something on her head" is a less specific re-phrasing of "balances a basket on her head"; "conversation" implies talking to another person.