Devolution can lead to balkanization or it can be a result of balkanization.  It can also occur without balkanization.

Devolution occurs when a unitary government hands increased powers to lower levels of government.  The central government still retains official power, but it allows lower government to have more power than they previously had.

Devolution can help lead to balkanization because it can increase the sense that the people in each of the smaller regions are different from one another.  It can help to create a greater difference, for example, between the Scots and the English.

However, devolution is not always a cause of balkanization.  Instead, it can often be a result of it.  We can look to Spain for an example of this.  In Spain, various regional groups (most notably the Basques) feel that they are different from the rest of the country and therefore want power devolved to them.  There, the balkanization has preceded the devolution, which has yet to happen to the degree that many Basques want.