Why does Swiss cheese have holes in it?

The holes come from a byproduct of some of the microbes added to milk to make Swiss cheese.  Specifically, there are 3 primary types of bacteria that are typically used to make Swiss cheese that vary slightly depending on the manufacturer.

1. Streptococcus Thermopilus
2. Lactobacillus Belveticus
3. Propionibacterium Shermanii

The first two types of microbes produce significant amounts of lactic acid, which is in turn, consumed by Propionibacterium Shermanii.  As Propionibacterium Shermanii consumes the lactic acid it produces acetate, propionic acid and carbon dioxide as a byproduct (which also gives the Swiss cheese much of its flavour).  The carbon dioxide forms bubbles, which is left in the cheese as it continues to ferment.