convert it to oxygen, so what do bugs do?

Do bugs breath out carbon dioxide or do they just live off oxygen? Or do they breath at all?

you have a great question there! wish i new the answer

Bug respiration is the same as humans with respect to emitting CO2 and breathing in O2.

Bugs don't have lungs like animals though. They breathe passively.

Bugs are animals, therefore you already know what they breathe in and out.

They breathe in oxygen and produce energy in the form of ATP just the same way as we do. Only difference is that 'bugs' do not have lungs, they are small enough and have a large enough surface area to volume ratio that they can get all the oxygen they need by diffusion. Some bugs have adaptations such as spiracles that allow them to 'absorb' more oxygen more efficiently.

Furthermore, plants too utilize oxygen in exactly the same way as animals and bugs!

bugs are animals. So their gas exchange is that of animals. If you mean bugs as in insects.
If you mean bugs like bacteria, they have many more options as a group in addition to using oxygen as a electron donor. They can for example use sulfur and produce H2S. Look up chemoautotroph if you are interested in this subject.