the point of continuity is that "close points get mapped to close points" (putting the subtle issues of how to quantify this aside), which clearly is the case for I->S^1, but continuity if the inverse then means "close points come from close points" and this gets violated precisely because the circle thus described is the result of joining the two ends of an interval together (it's precisely the quotient space [0,1]/0~1, but they don't need to know that).
So there is a way a "point can move in the codomain", namely traversing that gluing point, which is "invisible" in the domain and that's …