... how does that work, as soon as you click send, your balance drops. Does your balance go back up to what it was after an unconfirmed send?
The client shows the decreased balance on the assumption the transaction will be confirmed eventually. If a conflicting transaction goes through instead, the client should adjust the balance automatically.
One way you can create this situation is as follows:
1) You have an account with 50 bitcoins. Two clients run with the same wallet.dat.
2) On one, you transfer 40 bitcoins to account A. It shows a balance of 10.
3) At about the same time, on the other, you transfer 45 bitcoins to account B. It shows a balance of 5.
4) One or the other of these transactions will be confirmed, either the first one, the one with the largest transaction fee, or whichever one the miner who makes the next block happens to prefer based on his rules.
5) Both clients will eventually see which transaction got confirmed, the conflicting transaction will be discarded.
6) Both clients now show the correct balance.