To derive the inelastic 3-body equation for colliding balls of different masses, the conservation of momentum principle is essential, where momentum before the collision equals momentum after. The discussion emphasizes the need to consider the center of mass for calculations, although this approach is typically limited to two-body collisions. The problem involves analyzing two scenarios: varying the mass of the top ball and then varying the mass of the larger base ball, both falling from a fixed height. The focus is on incorporating the collision with the ground into the general inelastic equation. Understanding these dynamics is crucial for accurately modeling the behavior of the system.