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What is 'baking powder'? How does it make the cake soft and spongy?

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Hint: Baking powder is a dry chemical leavening ingredient made up of a mild acid and a carbonate or bicarbonate. The presence of a buffer, such as cornstarch, prevents the base and acid from interacting early. Baking powder is used to enhance the volume of baked products and lighten their texture. Through an acid–base interaction, carbon dioxide gas is released into a batter or dough, producing bubbles in the wet liquid to expand and leave the mixture.

Complete answer: Baking powder is used in place of yeast for end-products when fermentation tastes are undesired, where the batter lacks the elastic structure to retain gas bubbles for more than a few minutes, and to speed up the baking process. Chemical leavened breads are referred to as rapid breads because carbon dioxide is produced at a higher rate through the acid-base interaction than during fermentation. Baking powder was a game-changer in terms of reducing the amount of time and effort necessary to produce breadstuffs. It resulted in the development of new sorts of baked products such as cakes, cookies, biscuits, and other baked goods.
Baking powder is made from a combination of baking soda ($NaHCO_3$) and an edible acid such as tartaric acid. When baking powder is heated, carbon dioxide gas is released, causing bread or cake to rise and become soft and spongy.
$\mathop {{\mathbf{NaHC}}{{\mathbf{O}}_3}}\limits_{{\text{ Sodium Hydrogen carbonate }}} + \mathop {{{\mathbf{H}}^ + }}\limits_{({\text{ from tartaric acid }})} \mathop {\xrightarrow{{{\text{Heat }}}}}\limits^{\text{ }} {\mathbf{C}}{{\mathbf{O}}_2} + {{\mathbf{H}}_2}{\text{O}} + {\text{ sodium salt of tartaric acid }}$
The phrase "double acting" refers to the employment of two acidic components. Baking powder contains either a fast-acting or a slow-acting acid. At room temperature, a fast-acting acid interacts with baking soda in a wet combination, but a slow-acting acid does not react until heated. Baking powders are classified as "double-acting" when they include both fast- and slow-acting acids; those that contain just one acid are classified as "single-acting." Double-acting baking powders improve the consistency of baked items by allowing for a second rise in the oven, reducing the time between mixing and baking.

Note:
Baking powders also contain ingredients that increase the stability and uniformity of the product. As buffers, cornstarch, flour, or potato starch are frequently employed. In baking powder, an inert starch performs various tasks. It is primarily used to absorb moisture and so extend the shelf life of the compound by keeping the alkaline and acidic components of the powder dry so that they do not react prematurely. In addition, a dry powder flows and combines more readily. Finally, the extra weight enables more precise measurements.