You meet Cado near New Serenne Stable, who tells you to speak to Impa in the field nearby.
How to Start the Quest
Talk to Cado at -1312, 0732, 0086 (near New Serenne Stable, which is northwest of Lookout Landing).
Talk to Impa
Go to the platform that Cado is looking at, and talk to Impa.
Repair the Balloon
Use Ultrahand to attach the balloon to the base, then talk to Impa. Say "Sure!" if you want to go with Impa now.
Light the Fire
Take a torch from next to the campfire and light it, then get into the basket of the balloon and light the fire with the torch. There will be a cutscene.
Find the Tear
You may have noticed that the tear in one of the figure's eyes is filled in, while the other is just an outline. Float down to the tear that is filled in, at -1410, 0963, 0124. Examine the pool of water that you find there, and there will be a cutscene. The cutscene can be viewed again in the Adventure Log any time.
Next Quest
Afterward, Impa will talk to you. This starts the next quest: The Dragon's Tears.