When the energy reserves are depleted, fat (and a small amount of muscle) is turned into extra energy for your body to use. The amount of calories you burn of during yoga, depends on the difficulty of the practice. Flowing yoga practices usually burn more calories than static poses. Having said that, difficult static poses that require intense concentration to hold also burn of more calories.
Regular practice increases your muscles mass, but not in an obvious way like you would get from working with heavy weights. When you have practiced for some time, you will begin to see more muscle definition, making you look firmer and more healthy. Another benefit of increased muscle mass is that your body will use up more calories, even during rest. This is because muscle tissue needs more oxygen than fatty tissue. The increased demand for oxygen leads your body to burn off more calories, even when you are not being active.
Yoga is special in that it incorporates breathing techniques into the physical practice. The breathing techniques are beneficial because they increase the amount of oxygen that is present in the bloodstream. Oxygen is needed to convert stored body fat into energy that can be used by the body. The more oxygen you have in your bloodstream, the faster this process of converting fat into energy takes place.