Yeast — whether from packets, jars, or cakes sold at stores, or even from a starter you've prepared at home — is essential to bread making. And yes, it is alive, even if it is sold dried.
What Is Yeast?
Yeasts are small, single-celled organisms that feed off of simple sugars, breaking them down into carbon dioxide, alcohol (ethanol, specifically), flavor molecules, and energy. The process is referred to as fermentation.
Carbon Dioxide Helps Bread Rise
Carbon dioxide is one of the major gases responsible for leavening in baking. In cakes, it comes from the reaction of sodium bicarbonate under acidic conditions. In bread making (or special yeasted cakes), the yeast organisms expel carbon dioxide as they feed off of sugars. As the dough rises and proofs, carbon dioxide is formed; this is why the dough volume increases. The carbon dioxide expands and moves as the bread dough warms and bakes in the oven. The bread rises and sets.
Alcohol Also Helps Bread Rise
Most bakers attribute carbon dioxide to bread rise, and alcohol to bread flavor exclusively, but that's not entirely true. When yeast breaks down glucose, transforming it into carbon dioxide and ethanol, both byproducts are formed in equal parts. So for every glucose molecule, two molecules of carbon dioxide and two molecules of ethanol are formed. While at room temperature, the alcohol is liquid, but when the bread hits the oven, the alcohol begins to evaporate, transforming into gas bubbles that contribute to the rise of your bread. Given the amount of alcohol formed during fermentation, of course ethanol helps bread rise.
Yeast Also Helps Develop the Gluten
Without gluten, gas bubbles in bread doughs would be lost, resulting in denser bread. Gluten plays a crucial role in bread rise, trapping the bubbles of gas, and yeast has an impact on the development of gluten. This is especially important when you are following a no-knead bread recipe. As the bread dough sits in the fridge for hours and hours, enzymes in the flour slowly break down the gluten proteins into smaller pieces. Those smaller pieces can more easily assemble into a network and form gluten from even tiny movements we can't see.
The movements that help develop the gluten in no-knead bread are the gas bubbles that are released from the fermenting yeast. The gas bubbles move around slowly throughout the dough, and that movement pushes and rearranges the proteins in the bread dough so they can arrange into a network without you having to knead the dough.
Yeast is essential to the rise of bread, not only because it produces carbon dioxide, but also because it produces alcohol that evaporates as the bread bakes, and because it helps develop and strengthen the gluten network.