Why is the neutral tied to ground in my home's electrical panel?
Current wants to return to source, not to earth

Yeah, OK.  Lightning's source is actually earth.  The same be said for ESD, aka "shock on the doorknob" static electricity.  

However, for human-made electricity, that wants to get back to the artificial source -  typically the supply transformer. 

Transformers are insulated, so the two sides are not electrically connected.  The secondary winding's electrons do not want to get back to the primary.  Unless it's leaking (failing insulation). 

The neutral-ground bond

Your instinct is not wrong. You are thinking of an isolated system where none of the conductors contact earth.  I have had three such systems; two are intended and one was a malfunction, a loss of that same neutral-ground bond that worries you.  

For instance, the three wires would be hot1-120V-neutral-120V-hot2 relative to each other, but nothing (isolated) compared to earth.  If you grab earth and hot, nothing happens.  Great idea, right? 

The problem with isolated systems is they don't stay isolated without active labor of site maintenance electricians, e.g. In a factory.  You end up with leakage from something to one of the wires or transformer windings.  In my malfunction, I had a leak from Earth to Hot1.  So now, 


Earth to hot1 is 0 volts
Earth to neutral is 120V
Earth to hot2 is 240V


So now, touching hot1 is safe, but hot2 is twice as bitey. In 230V Europe, "twice as bitey" would actually mean 400V because of their 3-phase.  That's nasty business! 

Even worse, what if the leak is in the 2400V transformer?


Earth to hot1 is 2400 volts
Earth to neutral is 2520V
Earth to hot2 is 2640V


Yikes!

So you see, if you leave Fate to choose the first leak, you get Fate's choice instead of your own.  But if you force the choice, you can "peg" it where you want.  Then, the first leak becomes the second leak, completes the circuit, and allows circuit breakers to protect you.   In my malfunction, as soon as I installed the neutral-ground bond, that other hot-ground bond leaked enough current to hard-trip the breaker. 

And because neutral is bonded to ground, the hots cannot be more than 120V from ground.  That's the whole idea. 

For the neutral-ground bond, we use a strap of copper because it's cheap. But imagine what would happen if we used a 1-volt transformer? 


Earth to hot1 is 121 volts
Earth to neutral is 1 volt
Earth to hot2 is 119 volts


Any problem with that?  Nope, this would serve all the purposes of a neutral-ground bond, and would be very useful for troubleshooting.

Once we pick the conductor that is bonded to ground, we name it "neutral". The code books call it the chalkboard-scratching term "grounded conductor", i.e. The active (normal current flow) conductor which is grounded somewhere (but not here). We plan for it to be near ground, but if a neutral wire breaks, neutral may ride up near hot voltage.  That is why we insulate it like a hot. 

Your panel has all the neutrals and grounds all mixed on one bar. That's kind of "all your bars being the neutral-ground bond", which is legal, but tacky and misleading.  Best practice calls for rigid separation of these two, neutrals on the neutral bar, grounds on the ground bar (which you may need to buy as an accessory), and one specific neutral-ground bond and bonus points if you can easily remove it or get a clamp ammeter around it.