Muse, maybe this will help a little. Throughout most of North America (and some other parts of the world) the common way to supply power to a house is a system of two "Hot" lines from opposite ends of a transformer secondary winding, and a Neutral line from a centre tap. The transformer design is such that there is 240 VAC across the entire secondary, so 120 VAC between the centre tap (Neutral) and each end. Of course, all that is just "floating" Potential with voltages expressed with respect the transformer terminals only. So as a first point of safety, the Neutral line is connected to true earth Ground at the transformer. Thus we call this a "Grounded Neutral" feed system, and all voltages may now be referenced to true earth Ground. Neutral is 0 VAC, and each Hot is 120 VAC with respect to ground, with 240 VAC between the two Hots. For clear labelling at your breaker or fuse panel, the two Hot lines are called L1 and L2.
Since L1 and L2 are from opposite ends of the transformer secondary, the sine wave voltages between each of those and the Neutral (centre tap) are exactly 180 degrees out of phase. In your house with different loads connected from L1 to Neutral and L2 to neutral, the net CURRENT flowing back to the transformer along the Neutral cable is the imbalance or DIFFERENCE between the currents flowing in from the L1 and L2 lines.
At the breaker or fuse panel in your house, a bare copper line establishes a good connection to a true earth Ground - typically via the metal water supply line entering your house, but could be other means. In your panel (in modern house wiring systems, but maybe not in an older system like yours) that Ground line is connected to a Ground Bus used for all of the bare copper Ground wires ("bonding wires") in all the branch circuit cables through the house, and these are connected at every outlet to the round third plug blade hole. In addition, at every electrical device box the metal mounting box itself is connected to that Bonding Wire, and the exterior chassis of any connected load device (like a light fixture) is connected thusly also. That way any exterior part you might be able to touch is Grounded.
Also in your panel, the incoming Neutral line is connected again to the panel itself and to that Ground Bus and Ground line. Thus the Neutral is Grounded at both ends. The intent, however, is that the GROUND is to be used to carry away to true earth Ground only currents from abnormal situations, and normally should carry NO current. Thus it is always at truly zero Volts. The Neutral line, however, DOES carry the net returning current from all user devices. Because it IS carrying a current and has small but non-zero resistance, it DOES have a net voltage above zero whenever it is carrying currents. So, although the Neutral line is Grounded at two points, it can NOT be regarded as safe and harmless, whereas the bare Ground (Bonding Line) always should be at true Ground zero Volts.
In up-to-date house wiring, there are several rules about how these lines are used. A fuse or breaker in the panel is always where a branch circuit begins, and it feeds the Hot line of that circuit, colour coded Black for most. The Neutral line (colour code White) is connected directly to the panel Neutral bus - no fuse or switch or breaker in it to interfere with current return. The Bonding Line (bare copper) is connected to the panel Ground Bus. At an outlet with three blade holes, each hole now is different. Assume the outlet is arranged so that, when you look at it in the wall, the round hole is at the bottom. The two slots for the flat plug blades are above in an inverted triangle arrangement. The slot to the LEFT of centre is taller to accept a wider blade. That is the Neutral slot. The right-hand slot is not as tall and is the Hot slot. Even many 2-blade plugs are made with different blade widths so that you can only plug it into the outlet one way. Note that the WIDE slot (Neutral) can NOT fit into the NARROW Hot slot. Plugs with identical width prongs are allowed when the device it connects has no direct connection from either line to its exterior - for example, a small power supply unit that uses a transformer as the power input point. In the final power-consuming device, anything used to control the power - switch, fuse, etc. - is installed in the HOT line entering the device so power CAN be turned OFF completely. In a lamp, the Hot line though the switch must be connected to the small centre contact in the lamp base, leaving the socket shell (and hence the potentially exposed part of the lamp screw base) connected to Neutral that should be at very low voltage even when the lamp is operating.
There are several issues in older electrical systems that do not incorporate all these features and rules. In the old Knob-and-Tube wiring system, only the Hot and Neutral lines were installed for every branch circuit - there are no Bonding Lines. In fact, in many of those systems there may NOT be any connection of the fuse panel itself or of the entering Neutral Line to true Ground. So although the Neutral line feeding into your house IS connected to Ground at the transformer, it may not be at the second point in your panel. Now here's a big one. When that wiring system was installed, no attention was paid to the difference between Hot and Neutral. All that mattered was that there was a voltage difference that could be used for power. So ALL the branch wires are Black. At any wall outlet the fixture contained TWO slots of identical size. When wires were connected to that fixture, no attention was paid to which slot got which line. So you can NOT use the modern "rule" that the left slot is Neutral. Moreover, all the plugs used at that time had identical narrow widths, so you could plug any device in with the plug "up" or "down" (effectively reversing which wire into the device carried the Hot feed) and nobody thought that mattered. Even if you made the effort to go through your entire house and re-arranged the feed wires at each outlet to impose a rule that the LEFT slot is always Neutral, you'd still have outlets with two smaller slots that can only accept those plugs that can be plugged in either way! If, at the same time, you changed all the outlet fixtures to the new 3-prong type that forces you to plug in only one way, there still is NO true Ground connected anywhere! And of course, the dangerous tale happens when someone replaces on old 2-slot outlet fixture with a new 3-prong fixture, cannot connect any Ground, and does NOT try to figure out which feed line should go to which slot!
The use of GFCI devices (outlet fixtures) to "update" an older system like that lacking any Ground wires is a crutch - a pretty good one, but not the same. In a modern system, if there is any malfunction in a circuit or in a connected user device that allows current to "escape" its intended path and reach the accessible exterior, that exterior is connected to the Ground line. Thus any small current is carried away safely without allowing the Voltage on the exterior to become dangerous. THAT is why the Ground line must NOT ever be used to carry any other currents. If a large current flows because of the faulty unit, that will trip off the breaker or fuse supplying the Hot line of that circuit, removing all power. A Ground Fault Circuit Interrupter (GFCI) works differently and does not need a Ground for this purpose. It measures the current entering the GFCI unit from the Hot line and the current leaving on the Neutral Line. They should always match exactly. If any imbalance beyond a limit is detected, it shuts off the Hot line feed. This does NOT trip the breaker or fuse at the panel, but it removes all power from the attached device. Now, the original GFCI design was intended for use where electrical devices were used in somewhat hazardous locations (e.g., around a wet counter in a kitchen, or for outside yard tools). In those areas it is possible for small leakage currents to escape the device or tool and get to a person, even though those currents would not be sufficient to trip a fuse. The imbalance limit is set to less than the current through a human chest that might disrupt the heart and cause fibrillation and death. Using a GFCI instead in a regular old wall outlet in an older house with no Ground for return of abnormal leakage current DOES provide a different means of cutting off all power IF current leaks out of the intended circuit and fails to return fully on the Neutral line. It does NOT provide a Ground, but it does provide protection of people.
Sorry, that's rather long. It's not simple. But it is only the basics of this stuff.