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"System grounding" refers to the protective fuses or circuit breakers fitted inside the main panel which protect the service wiring for any particular external site or inside a particular building.

"Equipment grounding" refers to the provision of protective grounding wires within any individual piece of equipment which is not of the type that is "double insulated".

Taking the US as an example: in any modern home's wiring for socket outlets there are up to three wires in play.

Look at the the common three-prong plug:

The two slotted prongs carry the current back and forth to your appliance, from the "hot" to the "neutral".

The U shaped prong - the equipment ground - is used to help protect the home from the wiring overheating and catching on fire - or you from getting a shock - from a malfunction in the appliance.

It works like this: if a faulty connection occurs inside an appliance, either from material deterioration ("old age" caused by crumbling or burnt-out insulation) - or from an accident such as dropping an electric kettle onto a hard floor - it could start a home fire no matter what voltage it runs on, or could kill you if the voltage is higher than about 50 volts.

To help prevent this, an equipment ground wire is attached to any exposed metal casing so that, when properly working, there will be no current in the equipment ground because it is not connected to the hot wire.

If ever the hot wire makes contact with the exposed metal casing or the equipment ground wire, that would immediately cause a large surge in electrical current and that surge would blow the protective fuse (if one was fitted inside the appliance) or would exceed the rated allowed running current rating of the branch circuit breaker and cause it to trip off. Thus the flow of current to the equipment would be quickly turned off.

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