The Power Plant: Three-phase Power
The power plant produces three different phases of AC power simultaneously, and the three phases are offset 120 degrees from each other. There are four wires coming out of every power plant: the three phases plus a neutral or ground common to all three. If you were to look at the three phases on a graph, they would look like this relative to ground:
There is nothing magical about three-phase power. It is simply three single phases synchronized and offset by 120 degrees.
Why three phases? Why not one or two or four? In 1-phase and 2-phase power, there are 120 moments per second when a sine wave is crossing zero volts. In 3-phase power, at any given moment one of the three phases is nearing a peak. High-power 3-phase motors (used in industrial applications) and things like 3-phase welding equipment therefore have even power output. Four phases would not significantly improve things but would add a fourth wire, so 3-phase is the natural settling point.
And what about this "ground," as mentioned above? The power company essentially uses the earth as one of the wires in the power system. The earth is a pretty good conductor and it is huge, so it makes a good return path for electrons. (Car manufacturers do something similar; they use the metal body of the car as one of the wires in the car's electrical system and attach the negative pole of the battery to the car's body.) "Ground" in the power distribution grid is literally "the ground" that's all around you when you are walking outside. It is the dirt, rocks, groundwater, etc., of the earth.