How is software created? Well, let me explain things from a different perspective.

What is a human body made of? Atoms, combined to make molecules of Elements and Compounds. These, in special combinations make the DNA and different structures present within the cell. Cell is a unit of life, performing all the major activities, such as metabolism and reproduction. Many different types of cells combine in different ways to make a tissue. Same or different tissues make up an organ, which is the independent functional unit, such as the heart or brain. Many organs communicate with each other to carry out vital functions of the body, hence making a System, such as the Circulatory System or Nervous System. All these Systems make up a human body. This is perhaps a birds eye view of a human body, but if we go into the details, you can write books on each different atom. Imagine how much we can write about just a simple human body.

A similar diagram can be made for a software. There are bits, which can either be on or off, denoted by 1 or 0. Many bits combine to make a machine instruction. Several machine instructions perform a logical task, such as addition or subtraction etc. A high level language such as C++ has instructions, each executing these large number of machine instructions. This high level instruction is the basic unit of software. Many of these instructions make up a sub-routine or function, which in turn combine in different ways to make up a module. A module, just like an organ performs a complete independent function. Many modules work in coordination with each other to make a workflow, which is one of the many tasks performed by a software.

Now, how do we develop software? We take tissues and develop different organs. We make coordination among them as necessary to make different Systems which make up the body. Simple isn't it :)