Electricity flows from its point of generation through a connected series of wires all the way to the homes of residential customers. Along the way, devices called transformers change the voltage to minimize the power loss associated with transmitting electricity over long distances.
Whenever electricity flows through a wire, some power is lost due to the wire's resistance. The longer the wire, the more electricity is lost. Transformers are devices that step up or step down the voltage, raising it from tens of thousands of volts at the point of generation to hundreds of thousands of volts in high-capacity transmission lines. Similar devices at the consumer end step the voltage back down safely to the 120 or 240 volts necessary to run home appliances.
The electrical grid is a network of connections that route electricity to wherever it is needed. Power is stepped up from the generation voltage and transmitted through main transmission lines into each region. There, substations reroute the power into individual cities and towns, where smaller stations connect to the homes in individual neighborhoods. Each stage allows the utility company to manage the voltage to best suit transmission requirements, as well as limiting faults and outages to as small an area as possible. The interconnected nature of these grids, especially at the largest scale, also allows companies to buy and sell excess capacity to provide extra electricity to regions undergoing heat waves or otherwise experiencing high demand.