Is it breaking/bending any physics laws? Is it creating energy out of nothing?
Voltage is not energy. A switching power supply, for example, that takes a low voltage and makes a higher voltage is no less breaking the laws of physics than a lever that takes a low force and makes a high force.
Think of a pair of pliers, which is a simple example of a lever. The squeezing force in the pliers mouth is larger than what you squeeze the handles with. The reason this doesn't violate physics is that it's energy that's conserved, not force. Energy is force times distance. While your hand is applying a low force on the pliers handles, the distance those handles move compared to the mouth is more.
What can't happen is the force x distance of the mouth exceed the force x distance of the handles. Actually the force x distance of the mouth will always be a little smaller than the force x distance of the handles due to friction losses in the joint.
The same concept applies to electricity. In this case you think of power being conserved. Power is just energy per time. Volts x Amps is power, so the Volts x Amps out of a power converter can't exceed the Volt x Amps going in. Just like with the friction of the pliers joint, there will be some losses, so Volts x Amps out will always be less than Volt x Amps in.
Note that it is perfectly fine for either Volts or Amps to be larger out than in, so long as the other is inversely lower. For example, you could make a circuit that runs from a 6 V battery and makes 24 V. In fact, such things are done routinely. However, if the circuit draws 1 A from the battery, then the output current can't exceed 1/4 A. Again, in reality it will be a little less due to losses in the circuit.
Let's say for example that this circuit puts out 24 V at 200 mA. That's (6 V)(1 A) = 6 Watts in, and (24 V)(200 mA) = 4.8 Watts out. That means the remaining 1.2 Watts is wasted as heat in the circuit. We can also calculate the effeciency of this circuit, which is (4.8 W)/(6 W) = 80%. That's not a hard value to actually attain with a real circuit. High end switching power supplies are near 95% efficient.
No physics was abused in the making of this circuit.
No. No bending any laws of physics or creating something from nothing. P=IV. V goes up, I goes down. V goes down I goes up. Moreover there are inefficiencies in any converter so not only are you not creating something from nothing, but it costs something to convert from one voltage to another.
When you step up voltage you do it at the cost of lowering current intensity.When you step it down,you raise the apmperage and lower the voltage value.The power in won't be different than the power out,except the dissipation loses,as Olin Lathrop said.Think of a falling object without friction with the air(this is of course an ideal case).The total energy(potential+kinetic) is the same at any point in the air,but as it falls down the potential energy will decrease and the kinetic energy will be increased to make sure this happens,but the total energy is conserved.