There are varying degrees of "magic" involved. The simplest would just be loading the asset in your code and drawing it, which means you or your artist just make the asset (using Photoshop, 3DSMax, Maya, etc.) and you just load it in. Other times, the asset is way to big to reasonably load into memory (think of these games that require two or three DVDs to install), in which case you have to break the assets into chunks and work with chunks in your code. There really isn't a great answer to this. You'll see how the work together as you carry on.
How does one work with the other?
Depends on the game. Some worlds are created procedurally from a math algorithm (try googling fractal landscapes for some examples). Other words are created by artists (though this requires a bigger budget, because you have to pay them). Sometimes it's a blend of the two, where you have a set of assets created by an artists that are placed and organized procedurally to make it into a massive world.
And how are massive worlds created?
Sure, artists do it all the time.
Can you create these worlds without code?
If there's no programming, nothing will happen. You'll just have a pretty world with people in it, and everything is just sitting there static. Anything you want to actually do, or anything you want to happen, you have to program.
What are the limitations to development without using a programming language?
Think of your physical body as the "art"/"world", and your brain as the "programming". An artist can sculpt a human figure, but without a brain, it's just a static sculpture.