How does the PWM from MCU get translated into a output voltage as in Power Electronics
You have closed-loop feedback from the output to the controller. What's basically happening is that the resistor divider is providing a fraction of the output voltage. This is compared against Vref (a very constant voltage). If the measured voltage is lower than this Vref, then the high side pmos transitor needs to turn on. If the voltage is higher than Vref, then the nmos transistor needs to turn on to allow current to continue flowing through the inductor.

Note that most Power Electronics books don't show active rectification so usually you'll see the NMOS there replaced with just a diode pointing up from ground. Active rectification with the NMOS allows a much lower voltage drop between ground and the inductor so you waste less power. If a diode is there, there's generally a significant voltage drop on the order of 0.1 to 0.7 volts, which in a low-voltage power supply is very significant.

More detailed analysis:
Vref provides a fraction of the output voltage.
ADC (analog to digital converter) converts the voltage to a digital number. Then this value is subtracted from a digital reference voltage number. If the number is positive, then the measured value is less than Vref. The converse is true as well. This information then gets sent into a digital PID (proportional, integral, differential) controller which allows relatively easy control over the output without having too much overshoot, undershoot, or oscillations by a simple algorithm. This algorithm then sends the information along to the driver to go high or low resulting in as smooth of a voltage as possible. The PID controller allows changes in the output load, say turning on a motor, to not droop the voltage too long before the DPWM (digital PWM) corrects it by increasing the duty-cycle of the output to drive the PMOS higher for longer amounts of time to source the extra current needed for the motor turn on.

The nmos or diode is not there to drain power from the system. Rather it's there to allow the load to see uninterrupted current. If there was just a pmos there being turned on and off, when the pmos turns off, there's now an open circuit and the load would no longer receive any power at all. Instead, a diode or nmos allows current to continue flowing (from ground up through the inductor) to the load.

The inductor may be thought of as a component that creates constant current. So regardless of what's on the input (nmos) side of the inductor, the output side of it will have constant current. The inductor resists change in current, so this is the element that allows current to continue flowing even when the nmos or diode is connecting it to ground. The inductor only allows this constant current for a short period of time which is why it's used with a pwm.

The capacitor is a circuit element that tends to resist changes in voltage. This allows the load to see a relatively constant voltage regardless of load changes or the choppy wave coming from the pwm.

The waveforms from the driver will be a variable duty-cycle PWM, i.e. a square wave with high and low times varying each cycle depending upon load. The output from Mosfets should be the inverse of that signal because the mosfets in that configuration act as an inverter. The high-side voltage of this corresponds to the input wave you see in the block diagram picture corresponding to the regulator. So that wave goes into the top of the PMOS. The output of the mosfets &amp; the input of the inductor should switch back and forth between 0 and the wave looking waveform which would sort of be rough square wave. And the output side of it should be the flat line you're shown in the block diagram as the output. 

In retrospect of making this explanation, it does seem like a lot of work to go from a bumpy wave -> square wave -> flat line, but there's many advantages including, much smoother voltage regulation, faster response to changes in load, and the ability to lower the voltage to lower than the bumpy wave that was input into it with high efficiency.