The reason that the cooked bread is larger than the dough is the same reason that the dough slowly rises if left sitting on the kitchen counter: the fermentation action of the yeast. When the yeast is mixed into the moist dough, it ferments or reacts with the sugars in the grain flour to produce carbon dioxide gas and water. The evolving carbon dioxide gas permeates the dough and causes it to rise in volume as the gas gets trapped in the dough at the molecular level. When the bread is initially heated in the oven, this increases the rate of the fermentation, thus speeding up the rising action. When the bread gets hot enough in the oven, the yeast is deactivated and killed, thus ending all fermentation and rising action in the baked bread.
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