Lung diseases and alveoli, illustration. Normal lungs (top) and diseased lungs (bottom) are compared at the macroscopic (left) and microscopic (right) levels. The lung anatomy at left shows the trachea and the lung bronchi. At right, the smaller branching airways, the bronchioles, terminate in the alveoli, the site of gas-exchange with the blood in the capillaries. Diseases such as idiopathic pulmonary fibrosis damages the bronchioles and alveoli, reducing lung capacity.