Electric fences are designed to create an electrical circuit when touched by a person or animal. A component called a power energizer converts power into a brief high voltage pulse. One terminal of the power energizer releases an electrical pulse along a connected bare wire about once per second. Another terminal is connected to a metal rod implanted in the earth, called a ground or earth rod. A person or animal touching both the wire and the earth during a pulse will complete an electrical circuit and will conduct the pulse, causing an electric shock. The effects of the shock depend upon the voltage, the energy of the pulse, the degree of contact between the recipient and the fence and ground and the route of the current through the body. Courtesy of Wikipedia.

You can also read more about how this fencing works at this Manitoba Government site or the University of Maine site.