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Theory:

When many electrical devices are connected in series to a single socket, there will be an overflow of current, causing the electrical circuit to overload. When the current running through a wire exceeds the maximum limit, the wires become overheated and causes fire. It is then referred to as overloading.
 
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Overloading circuits
Short-circuiting:
A short-circuit occurs when a live wire makes contact with a neutral wire.
In other words, the short-circuit happens due to the wear and tear of insulation on the wires due to temperature changes or other external forces. The direct contact of wires leads to an overflow of currents in the circuits, which eventually causes a short-circuit.
 
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Short-circuiting of a plug
 
A short-circuit reduces the circuit's effective resistance, thus allowing a large amount of current to pass through the wires.
 
These short-circuits and overloads are very dangerous and can cause fire accidents in the buildings. The fuse wire or MCB will automatically disconnect the circuit during an overload or short-circuit to prevent accidents.
Earthing:
In most household circuits, a third wire, known as the earth wire, is attached to the body of the metallic electric device. The earth wire has green insulation, and its opposite end is attached to a metal tube or an electrode buried in the ground. This wire gives a low-resistance channel to the electric current.
 
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Earth wire
 
When a live wire accidentally contacts the body of a metallic electric appliance, the earth wire directly transmits the current from the appliance's body to the Earth. As a result, the earth wire acts as a protective conductor, preventing us from electric shocks.
Reference:
https://upload.wikimedia.org/wikipedia/commons/8/83/PEN_earthing.JPG