What are grounded outlets?

An inaccurate description, technically

A grounded outlet has a wire that runs to a metal plate or frame that is buried in the ground. This is a safety device to help prevent someone from getting an electric shock because electricity always wants to take the shortest route to the ground.

If you attempt to mess with a non grounded circuit you may get shocked because the electricity will go through you to get to the ground. On a grounded outlet, the current will go straight through the grounded wire, because metal is a better conductor.

Normal American-style outlets have 3 holes, two straight conducting sockets and a bottom grounding socket.

However, some extension cords may not have 3 holes, so they are not grounded.

The male end of a cord - the end with prongs, not holes - also matters: if it does not have prongs that go into all three holes, it is not grounded.

Some better descriptions

The ground wire is connected to the outside metal casing of the appliance. It guarantees that if somehow the live or "hot" wire in the appliance shorted to the case, you won't get a shock - because the short circuit current will go to ground and not through you - and, in doing that, it will trip the breaker to cut off the supply of current.

<><><>

The purpose of the ground wire on an appliance or in a house branch circuit is to provide a low impedance low resistance return path for the fault current to return to the distribution panel. This high return fault current will cause the circuit's breaker to trip and disconnect the fault.

<<>>

The ground wire usually doesn't have anything to do with the normal electrical functioning of an electrical appliance but - because the ground wire is connected to the chassis or casing of the appliance - if an electrically 'hot' wire breaks or its insulation chafes so that it touches the chassis or casing, it will be shorted to ground via the ground wire, causing a very high current to flow in the 'hot' wire.

That high current will cause the circuit breaker to trip or a fuse to blow, thus cutting off the current and preventing the chassis or casing from electrocuting the user. Shutting off the current should also prevent the wires in the circuit from heating up so much that they catch on fire. Such a fault can easily be the cause of a serious house fire.