"Let us then conclude boldly that man is a machine, and that in the whole universe there is but a single substance differently modified." — from L'homme Machine1 by La MettrieModern science has, in fact, shown that living beings — including humans — are made from a common substance and that our organic chemistry is distinct from inorganic chemistry only by virtue of arrangement. Life is made of the same stuff as non-life. So far as we can tell, life also operates under the same physical laws as stars and planets and automobiles.
There's no longer any great mystery to why life would exist in our universe. Stars form and die, leaving behind heavier elements which form planets. On at least one planet, simple replicators formed and eventually produced the wide variety of life we see. All of this makes sense as the result of physics over time.
The mystery is how consciousness got into the machine. While there is reason for biological machines like lions and humans to process input, form beliefs, and select appropriate actions, there's no obvious reason why any of this would — or even could — produce the subjective experience of being a lion or human being. And so philosophers have sometimes doubted whether non-human animals have inner experience, or whether a world of physically identical humans might utterly lack consciousness. The latter go by the provocative tag of "philosophical zombies."2
A particularly disturbing view is that consciousness is caused by the operation of biological machines, but has no effect on the world. According to this type of epiphenomenalism, our experience of consciousness is a helpless side effect along for the ride. This ties into the larger question of whether all of our thoughts and actions are the determined results of physics working itself out. Such ideas seem absurd at first, but it turns out to be difficult to find evidence to the contrary beyond offended intuitions. Hey, my intuitions are offended too! That is why I'm not giving up on the possibility there is more to consciousness than physics, or at least more to physics than what we think when we hear "machine."
2. http://www.qwantz.com/comics/comic2-597.png and possibly http://www.youtube.com/watch?v=f5IRI4oHKNU