The earth wire gives current an easy path to earth, because it has a very low resistance. If the live wire is connected to earth in any way, a very large current flows, because the resistance of the path is low and the live wire is at about 230 V.
This large current has two dangers. It heats the wires, which can start a fire. It can also give a person an electric shock. If a person touches the live wire while standing on the ground, their body gives a path to earth and a current flows through them.
A fuse or circuit breaker is there to stop this. The large current makes the fuse melt or the circuit breaker trip, so the supply is cut off.
A fault is also dangerous when a metal case is connected to the live wire and is not earthed. The case is then at about 230 V and anyone touching it could get an electric shock.