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)
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