How do you create 120V from 240V 3 wire L1 L2 G in a residential system?

The proper terminology is L1,L2,N. N is for neutral and it is this wire that is grounded. The 120 voltage is already there to use in a residential system. The voltage measurement from the L1 to N will give you 120 volts. Also from L2 to N will give you 120 volts and as you know from L1 to L2 will give you 240 volts. Single pole breakers in the panel board starting at the top, alternate between L1 and L2 all the way down to the bottom. These breakers all have 120 volt outputs. If you plug a 2 pole breaker into two slots then you get 240 outputs because L1 and L2 are adjacent to one another.