Designing af PCB with an ISP header and a LED
The yellow lines (called "airlines" in some PCB programs) show what points have to be connected together - they don't show the actual or required routing of the traces.

If you route the board manually, you look at the airlines to see what connections need to be made, then attempt to place tracks to make those connections, avoiding obstacles as necessary.  Your tracks don't have to follow the connection order indicated by the airlines, as long as all the required connections are made.  For example, if the airlines run from point A, through B, then C, to D, it is quite acceptable to route the track by going A, C, D, B if that is easier.

A note on your schematic:  The long line on the battery symbol is normally the positive terminal.

Pin 1 of a connector like JP1 is normally indicated by a square pad.