TLDR: is a Neutral wire in a "live + neutral + ground" setup the load output wire or a neutral wire when doing light switches?
My house is ca. 1907 for context, and the only wires I've got are:
- Red (Live), tested with multimeter.
- Grey (Neutral..?), was connected to common terminal of old (traditional) switch
- Exposed (Ground?) Connected to terminal housing.

My new dimmer supports "with or without neutral" circuits:

but what confuses me is how the 2nd wire is a neutral line, but clearly is being used as common; should this be connected as neutral, or do I have a "no neutral" circuit setup?
I've got some old wiring from the cellar to demonstrate what I think is correct, including some ground wire taped up to connect the L+N terminals as the circuit describes:
(NB: Brown is Live, Blue is Neutral, this wire postdates the house by a LOT)
Not too familiar with British wiring, but I am thinking your brown wire is a switch leg that goes directly to the light itself. If you go to the light you're wanting to control, do you have the same red and brown wire? You could use your multimetre to ring the wires out and determine what is going where to be certain.
I did more researching and you're right. neutral is used as the switch leg as you call it. Here's it's called a "common" line. Some circuits will have a second live wire that takes the place of "common" so the Neutral would be used in that case, but the naming conventions confused me ๐