Which function(s) actually create the physical resized image files?
The function that generates the image URL basing on the style is theme('image_style'), which is called by theme('image_formatter'), which then called from image_field_formatter_view(); this function is the implementation of hook_field_formatter_view(), the hook that in a field formatter outputs the content of the field in the view for the entity containing that field.

The image is only generated when you access its URL. I tried the following code:

theme("image_formatter", array("image_style" =&gt; "thumbnail", "item" =&gt; array("uri" =&gt; "test.png", "title" =&gt; "Image title", "alt" =&gt; "Alternative text")));


The output that I obtained is the following: 

&lt;img typeof="foaf:Image" src="http://tero.local/dr72/sites/default/files/styles/thumbnail/public/test.png" alt="Alternative text" title="Image title" /&gt;


If you look at the code of image_menu(), you will find the following lines:

  $directory_path = file_stream_wrapper_get_instance_by_scheme('public')-&gt;getDirectoryPath();
  $items[$directory_path . '/styles/%image_style'] = array(
    'title' =&gt; 'Generate image style', 
    'page callback' =&gt; 'image_style_deliver', 
    'page arguments' =&gt; array(count(explode('/', $directory_path)) + 1), 
    'access callback' =&gt; TRUE, 
    'type' =&gt; MENU_CALLBACK,
  );


image_style_deliver() is the function that generates the image.