What does the neutral wire actually do in 110v electricity do? Is it a grounding wire or?

The neutral and ground are connected together at you electric service. From there, they will stay separated. The difference from there on is, The neutral carries current, and the ground for protection.
Example: the hot and neutral(black and white) of a drill is used to operate drill.
The ground is attached to the case. If you drill into live wire, breaker trips, and keeps the drill from becoming live. In Europe they may call it a return.

Which wire is hot, black or white?

The White(Neutral) and ground(green or bare) connect together at the service.
The neutral is at ground potential and carries current, the green or ground also at ground potential and carries current from a fault, and the Black is the Hot wire.
You would read 120 volts between hot and ground and hot and neutral.
If you measured between Ground and Neutral, it would be Zero, If all wiring is intact.

Black is Hot, Any color can be use for a Hot, Except Green, Bare, White or Gray.