On mains-operated power supplies, the ground wire of the AC line is connected to the power supply chassis. What protection does this provide if a fault occurs in the power supply?

The primary purpose of connecting the AC line ground wire (the green or bare wire) to a power supply chassis is operator safety. It protects you from fatal electric shock in the event of an internal short circuit. If a 'hot' live wire inside the power supply breaks free and touches the metal casing, an ungrounded chassis would become electrified and deadly to touch. However, because the chassis is tied directly to the AC ground, this fault instantly creates a massive short circuit to ground. This safely and immediately trips the home's circuit breaker or blows the equipment fuse. This feature is strictly for human electrical safety; it does not regulate voltage to connected devices or protect the circuit breaker itself.