We tend to think of oxygen as being essential to life because it is essential to animal life. It seems strange to us that its irrelevant, or even poisonous to some species. The truth is that oxygen can be pretty destructive because it reacts so readily with so many things. We animals get our energy by breaking down food. We use the energy to make ATP (the form of energy that all of our cells use) and get rid of the matter as CO₂ (which we breathe out), Water (which we urinate, sweat, etc.) and other wastes. But theres more than one way to make ATP. The first bacteria evolved in an atmosphere with a very low oxygen level (0.01% compared to about 20% now). They probably broke down complex molecules for their energy and stayed away from the toxic oxygen. Their chemical pathways were different from ours.

About two billion years ago, bacteria that did photosynthesis evolved. They took in CO₂ and water as raw materials, and used the energy from light to make sugars, which they could then break down for energy to make ATP. The oxygen they produced was just a waste product, but it built up as the bacteria multiplied, eventually leading to the oxygen-rich atmosphere we have today. With oxygen, many more types of molecules can be made. Newcomers that needed oxygen evolved.

Most of the living things we think about do photosynthesis (plants, algae, cyanobacteria, some other things) or cellular respiration (animals, fungi, plants, protozoa, some other things). But there are other energy pathways out there. At the bottom of the ocean, geothermal vents are surrounded by communities based on the breakdown of sulphur compounds. Bacteria live in all sorts of places and do lots of things that we are still discovering. We use oxygen as a place to dump the electrons we have left over at the end of the electron transport chain that makes ATP. Theres more than one way to get rid of electrons, though. Some bacteria use nitrate (NO₃). Others use sulfate (SO₄). Some even use bicarbonate (HCO₃). So theres nothing magical about oxygen, other organisms do fine without it. Oxygen even interferes with some of these pathways, killing the bacteria that use them.

If you are interested in bacteria, think about studying microbiology. We know so little about them that there are many amazing species left to find. Imagine being the first person to study all of the animals on an entire continent. Microbiology is still like that.

For most organisms, they use oxygen during cellular respiration as an electron acceptor.Basically, the oxygen accepts electrons and turns into water (H₂0) or carbon dioxide (CO₂). Obligate anaerobic bacteria survive in the absence of oxygen because they use other molecules as their primary electron acceptors. Common electron acceptors used by anaerobic bacteria include sulfate, nitrate, iron, manganese, and mercury. For more on obligate anaerobic microbes, see this Wikipedia website:

Or see "anaerobic respiration" on this article on Cellular Respiration:

Well, oxygen for them is poisonous, in fact.

Life forms of any kind work by using chemical reactions that produce energy. Oxygen is a reactive gas and can combine with a lot of things to release energy, which is why so many living things use it, but there many are other chemicals that also work: there are bacteria that photosynthesize using hydrogen sulfide instead of water and produce elemental sulfur instead of oxygen as a by-product, for example, and other bacteria that take the oxygen atoms out of sulfates to react with carbon, and still other bacteria (and some fungi) that ferment sugars to produce carbon dioxide and alcohol and/or acetic acid (vinegar). As long as there is a way to get energy without oxygen, there are bacteria that can live without said oxygen.