Unit interval $I$ and $S^1$ have different topology - if one identifies the opposite ends of $I$ to make $S^1$, lots of points which were "far" in $I$ (in terms of a number of shared open sets), become "near" in $S^1$.
Is such a function $f: I \to S^1$ continuous?
Following the definition of continuous function: function $f: X \to Y$ is continuous if every open subset $S_Y \subseteq Y$ has an open preimage $S_X \subseteq X$, it seems that the place where opposite ends of the interval $I$ were "joined" has open preimages in $I$.
These are just unions of open sets, which are in turn open sets, so the answer to the question whether $f$ is continuous seems to be yes.
But I suspect that there is a catch, and I don't see some elementary contradiction. Overall, can continuous functions between topological spaces disrupt the topology of the domain, and if not, how to show that?
Yes, the function $x \mapsto e^{2\pi ix}$ is continuous. As you mention, it is a quotient map that identifies the endpoints of the interval $[0,1]$.
To your second question, of course a continuous map need not preserve the topology of the domain. Constant functions are one easy example. A continuous (surjective) function identifies every open set in the range space with an open set in the domain, but obviously the converse is not true unless your function is a homeomorphism.