Electricity is typically created at a local power plant in your locality. Once created, it is sent off into the central power grid which connects to your entire city. Your building has the privilege to connect to the central grid, of course, so long as you are responsible and pay your electricity bills.
Your building also needs to have its own power grid, much how the city does. Otherwise, you would never be able to organize the use of your electricity. This is where having a distribution panel comes into play. By using one main circuit that separates into several smaller circuits, you can easily control the flow of electricity for an entire home.
When you need to shut off all the power for your home or office building for whatever reason, simply turn the main switch off. If you need to turn off the power in one room or for one major appliance, a distribution panel will typically have a separate switch for things like these. It all depends on how you wire the panel.
