A neutral is a "grounded conductor"
If you look at the transformer on the pole supplying your house, you see it has three wires coming off the side of it, going to your house. Two of the taps, the hots, come off the ends of the transformer secondary windings. If you measure the voltage across these, you get 240v. The center tap is the "neutral" which is known as the "grounded conductor". This tap comes off the middle of the secondary winding of the transformer. It stands to reason, if the entire length of the winding gives you 240v, then half of the winding will give you 120v, which it does. A 120v circuit is created by using one of the hots, and this neutral, the center tap off the winding of the transformer. This neutral is also connected to a ground wire, that runs down the pole and all the way to the bottom of the pole. As it arrives in your house, the neutral is connected to the same terminal that the ground is, which is connected to the ground rods, and possibly water pipes.
The ground circuit is for providing a path for short circuit current to travel back to ground. Current normally does not travel on this ground circuit, even though it is connected to the neutral at the service entrance.