It is less rigid than cement and allows room for tile to settle and expand as necessary. Some grout is touted as being waterproof because of its ingredients.
Additives
Waterproof grout is usually nothing more than grout with additive that works as a sealant. Companies that produce and sell these products usually create their own additives that they tout as being waterproof. These sealants usually last for only about one year, according to the Aldon Corporation. Additives exist that can later be added to reseal the grout, but these sealants can have a hard time bonding with the grout because of the remaining original sealant that may be left in the grout.
Cement
Cement is one of the main ingredients of waterproof grout. Grout itself is nothing more than cement with a greater level of water content. This additional water content gives grout its plasticity and makes it less rigid than cement. For this reason, the Masonry Advisory Council argues that grout is not cement per se, nor is it mortar. Instead, it is something somewhere in between. It should also not be confused with mortar because mortar contains lime, whereas grout does not.
Aggregate
The aggregate compound in grout is the binding agent that helps hold the grout together. In mortar, the lime combines with sand, whereas grout consists primarily of sand and gravel. It is this difference that makes grout more pliable than either mortar or cement. This is the reason that grout is often used in the space between tiles, rather than mortar or cement.
Water
The amount of water in grout is a primary consideration that is made when determining how much water to add to the grout mix. Grout is supposed to be somewhat runny so that it can fill in around the tile and any other type of surface to which it is expected to adhere. If it is overly stiff, it will not flow correctly and will get hung up in the spaces. Water is used as a means of making the grout flow to where it is supposed to go.