The picture shows a small part of a muscle cell. Glucose and oxygen enter from the capillary at the top, are broken down inside the cell, and leave as carbon dioxide and water. The energy released along the way joins phosphate to ADP to make ATP, and ATP is what the muscle uses when it contracts.
Glucose is first split in glycolysis, in the cytoplasm, into two molecules of pyruvate with three carbons each. Pyruvate enters the mitochondrial matrix and gives up all of its carbon as carbon dioxide while it goes around the citric acid cycle. Each time hydrogen is removed from the glucose, NAD+ or FAD takes it up and becomes NADH or FADH2, which carry it to the inner membrane.
On the inner membrane, electrons handed over by NADH and FADH2 pass from one embedded protein to the next. Each time they pass, H+ is pumped from the matrix into the intermembrane space, and the last to receive the electrons is the oxygen you breathed in. Oxygen combines with the electrons and H+ to form water. When the H+ that has piled up in the intermembrane space flows back into the matrix through ATP synthase, the enzyme turns and makes ATP.
Here one NADH pumps 10 H+, one FADH2 pumps 6, and one ATP is made for every 4 H+ that flow back. Counted this way, one glucose yields about 30 to 32 ATP. The figure of 38 found in textbooks comes from an older way of counting that assumed 3 ATP per NADH and 2 per FADH2.
When you reduce the oxygen, nothing is left to take the electrons at the end, and the electron transport chain stops. NADH keeps piling up because it cannot hand over its electrons, and once NAD+ runs out the citric acid cycle stops as well. In the cytoplasm, pyruvate then takes the hydrogen from NADH and becomes lactate, which gives NAD+ back. Glycolysis keeps going, but the ATP from one glucose drops to 2.
Click a part of the figure to read what is happening there in the column on the right. Oxygen, exercise level and glucose can be changed in the panel below the figure.