The 'ground' is typically grounded at your house (to a water pipe often times). It's purpose is a place for the electricity to go if it manages to reach the 'case' of the device.
IE if your dishwasher was to leak into the motor housing (motor housing and dishwasher itself are both grounded) it could allow electricity to reach the housing due to water conducting the charge. The ground on the dishwasher housing would give a path of less resistance (less than you anyways) to go to so you don't smoke yourself when you touch it.
The neutral is actually grounded I beleive at your local power reduction station, where the high power lines are dropped to 220 before they feed your neighborhood grid. It may also actually be closer, like your local transformer, but I understand the point is that it is supposed to be sufficiently distanced from the house ground point such that these cannot conduct to each other.