Is "essere fuori come un balcone" a well recognized phrase in regional usages?
One time I tell it to a person in Sicily, who was badly parking their car, and I had the impression that they didn't understand that phrase.
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I believe it comes from essere fuori di senno (having lost one's mind), which is frequently contracted in essere fuori in popular language. Then, this fuori is qualified with something which is commonly outside something else: a balcony sticks out of a house.
So it's like è fuori di senno come un balcone è fuori dalla casa, but this of course loses freshness.
Its usage is regional, but spreading, so it's not surprising somebody doesn't understand it.
As others already pointed out, in Italian we have the expression
Essere fuori di testa/senno
which almost directly translates to the English
To be out of mind
It is then often abbreviated into
which translates to the English
To be outside
Whenever one wants to add more emphasis, some analogies for being outside are used.
Essere fuori come un balcone is indeed one of the most common in my region (I'm from Milano in Lombardia), but I bet many other regions have their own versions of it.
For instance I occasionally heard
Sei fuori come una mina
deriving - I believe - from mines (the bombs) to be generally placed in open fields. Generally speaking I think any native speaker would understand any sentence following the pattern Sei fuori come < X >, regardless of having heard the analogy before or not. It might sound weird, but it wouldn't lose the meaning.
Another funny example is
Sono fuori come gli agricoltori che raccolgono i pomodori
as found in the song "Sono fuori" by Articolo 31 (lyrics).
The expression should be understood as essere fuori di testa come un balcone è fuori dalla casa. In Northern Italy, the expression would be understood by everybody. In other regions, the expression may not be understood, and the shorter essere fuori di testa or essere fuori di senno is the most used one. What probably makes the first sentence not clear to everybody is that di testa is implicit.
You can think of it as a series, originated by the first and then somehow personalised by different people from different regions, I'm from Genova (Genoa) where it's usage is really common and with regional variants. (You'll find one at the bottom of the list.) All versions mean you are out of your mind. The more common I've heard are:
I now live in the Southern Italy, and I don't hear it very often.