Why does yeast make bread rise and bubble?

The bread, or rather, the dough, contains a certain amount of sugar which has been made in it from the starch produced by the wheat plant. Yeast consists of an enormous number of tiny living plants, which produce inside their bodies ferment – a chemical substance – that has the power of working on the sugar in the dough so that it is broken up and changed into other things. These things into which the sugar is changed are two, alcohol and carbonic acid gas. The alcohol thus made passes away into the air. The carbonic acid, as it is formed, makes little bubbles in the dough, and as these get bigger and more numerous, they raise the dough and it into bread.

More reading:
Yeast (Wikipedia)
Bread (Wikipedia)

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