What are the errors with using only the line from a socket to power an appliance?
Earthing or grounding is designed to protect the users of electrical equipment by preventing dangerous voltages to appear on metal casings, etc.







simulate this circuit &ndash; Schematic created using CircuitLab

Figure 1. Building supply neutral is earthed / grounded at the supply transformer.

In most countries the electrical utility grounds one of the wires from the local step-down transformer. This "neutralises" the wire as there is now no potential relative to earth. The live wire, on the other hand, has full voltage between it and earth. This explains why your transformer will work with the neutral wire connected to earth. The fact that it works also suggests that you don't have "earth leakage" or "ground fault" protection in your house. (You should have.)


  My question is, What is wrong with this design, and why did it sort of work?


It sort of worked for the reasons explained above.

There is plenty wrong with your circuit:


You are using ground as a return for your neutral current. Ground resistance can vary and can be high. This can give problems with your circuit.
Safety: if the ground wire becomes disconnected from your ground connection the wire will be live. This provides a potentially lethal shock hazard.


Additional information:







simulate this circuit

Figure 2. Supply transformer supply and earthed appliance.

Yes Live is the supply, Neutral is the return and the Earth is protection. Normally there is no current in the earth wire but if, for example, a live wire fell off inside the appliance and contacted the metal there is a risk of electrocution. Earthing the appliance prevents the case rising to dangerous voltages. In the event of a severe fault a high current may flow but the fuse will then blow, making the system safe.

Double insulated devices don't need to be earthed so a two-pin plug is adequate.

See also: 
In any electrical equipment having single ph 230 v ac supply ,if neutral and earth wire exchanged then what will be the consequence.

Finally, what you are doing is dangerous given your poor understanding. I recommend that you work on low-voltage circuits until your knowledge of electrical theory is improved.