The power distribution grid delivers electricity from a power plant to your house. Inside your house, the electric charge moves in a large circuit, which is composed of many smaller circuits. One end of the circuit, the hot wire, leads to the power plant. The other end, called the neutral wire, leads to ground. Because the hot wire connects to a high energy source, and the neutral wire connects to an electrically neutral source (the earth), there is a voltage across the circuit -- charge moves whenever the circuit is closed. The current is said to be alternating current, because it rapidly changes direction. (See How Power Distribution Grids Work for more information.)
The power distribution grid delivers electricity at a consistent voltage (120 and 240 volts in the United States), but resistance (and therefore current) varies in a house. All of the different light bulbs and electrical appliances offer a certain amount of resistance, also described as the load. This resistance is what makes the appliance work. A light bulb, for example, has a filament inside that is very resistant to flowing charge. The charge has to work hard to move along, which heats up the filament, causing it to glow.
In building wiring, the hot wire and the neutral wire never touch directly. The charge running through the circuit always passes through an appliance, which acts as a resistor. In this way, the electrical resistance in appliances limits how much charge can flow through a circuit (with a constant voltage and a constant resistance, the current must also be constant). Appliances are designed to keep current at a relatively low level for safety purposes. Too much charge flowing through a circuit at a particular time would heat the appliance's wires and the building's wiring to unsafe levels, possibly causing a fire.
This keeps the electrical system running smoothly most of the time. But occasionally, something will connect the hot wire directly to the neutral wire or something else leading to ground. For example, a fan motor might overheat and melt, fusing the hot and neutral wires together. Or someone might drive a nail into the wall, accidentally puncturing one of the power lines. When the hot wire is connected directly to ground, there is minimal resistance in the circuit, so the voltage pushes a huge amount of charge through the wire. If this continues, the wires can overheat and start a fire.
The circuit breaker's job is to cut off the circuit whenever the current jumps above a safe level. In the following sections, we'll find out how it does this.