Bakers yeast is a fundamental ingredient for making a great bread, a living microorganism which offers the ability to "grow" to the bread. In the world of baking, there are four types of yeast: natural, fresh, dry and chemical (also known as baking powder).
The natural yeast is obtained from a mixture of flour and water, left by acidifying from agents and bacteria in the air: the result is the so-called "sourdough".
Fresh yeast is obtained from a microorganism, the so-called "Saccharomyces cerevisiae". It's a cubes yeast usually sold in supermarkets, located in the refrigerated area.
Dry yeast is a freeze-dried piece of fresh yeast, sold in bags: it's absolutely interchangeable with the fresh yeast, except that one must keep in mind that the amount of dry yeast to be used will be less than the amount of fresh yeast: in general a sachet (0.25 oz) of dry yeast correspond to a cube (1 oz) of fresh yeast.
The baking powder is mostly used in pastry and contains substances (absolutely harmless and natural, in spite of the 'chemical' term that may arouse suspicion) that in contact with water and the other ingredients originate the production of carbon dioxide, favoring swelling of the dough.
To make a good Italian bread you normally use the fresh or dry yeast, or even better the sourdough, both have to be dissolved in warm water. The yeast kneaded together with the flour and the water turns the sugars into ethyl alcohol and carbon dioxide bubbles, causing swelling of the dough and its leavening.
The action of yeast is affected by temperature: it performs excellently to an overall dough temperature of approximately 72° F. Please note: the amount of yeast to put in a dough is very important and depends greatly on the strength of the flour, then try always to be very precise in measuring the yeast. Adding too much yeast, hoping to speeding up the operations, will alter the balance of the dough and inexorably affect the final result.
Different situation as regard the natural yeast, or sourdough. In addition to "Saccharomyces cerevisiae", this kind of yeast contains other micro-organisms that contribute to make easy to digest the whole dough. Its composition is highly variable because it is part of the environment: a bread made with this kind of natural Bakers yeast will never be the same from one place to another, because of the different composition of the microflora living in a certain location.