Both Live conductors (Live and Neutral) are tapped off to give an equal number of windings around opposite sides of a ferrite toroid (a ring of material that becomes magnetic only when another magnetic field is present) As the number of turns are equal and the current direction is opposite at any given moment (AC is flipping between +ve and -ve remember) their influence on the magnetic field induced on the toroid is balanced out. Normally (there are exceptions) whatever goes in to a circuit, in terms of current, comes out again so as far as the toroid is concerned, under normal circumstances, everything balances. If a pre defined amount of that current goes elsewhere up someones arm for instance when they get strapped across the mains, there is now an imbalance in the induced fields on the toroid. That imbalanced magnetic field creates a small current in the toroid which is detetcted and used to actuate the isolation built in to the RCD.