Any port-line can be changed from an input to an output or vice versa, at any time,  during the running of a program. 
If you are going to change the direction of a port-line, you must take into account any devices connected to the line. For instance, if a switch is connected between an output of the chip and rail; if the line is an output and is made LOW, the chip will be damaged when the button is pressed.  
The program consists of two loops in Main. The first instruction in Main looks at the input line and determines if the button has been pressed. This where a decision is made. If is is  not pressed, the micro is taken to the next instruction in the program and a loop is executed that makes an output line LOW to turn off a LED. If it is pressed, the micro is taken to the third instruction in Main to turn ON an output bit to illuminate a LED.  
The micro never stops executing instructions. It must be executing one loop or the other.
Main must be a loop (or more than one loop) as this is where the LED is turned ON and OFF and the microcontroller will loop this routine many times per second. 
In Main, instructions will take the micro to other routines called sub-routines, carry out operations such as delays, produce beeps, etc and return to Main, as you will see in a moment. 
Study the following experiment then go to the interactive "drag" program below. 
You will required to drag the instructions with your mouse, to create the program.