Every transaction consumes whole UTXOs as inputs and mints new ones as outputs. Pay 0.3 BTC from a 1 BTC coin and the transaction spends the full coin, sending 0.3 to the payee and ~0.7 back to you as change — a brand-new UTXO, exactly like breaking a large bill.
UTXOs are why fees depend on transaction size, not value (more inputs = more bytes), why "dust" exists (a UTXO worth less than the fee to spend it), and why consolidating many small UTXOs during quiet mempool periods is a classic cost-saving move. Dormancy is measured on UTXOs too: a dormant wallet is a set of UTXOs that hasn't been spent in years.