I came across this instructable about using no external hardware but two pwm pins to control a motor in both directions. Usually you would use an H bridge. However, ever since I have had my Arduino I have heard that you are not supposed to connect a pin to another pin. So how does this circuit works. It looks like he sends a signal from one pin and in my experience it would fry the board. So basically, my question is this circuit ok with an Arduino Nano and if so how does it work? Below is a picture of the setup he gave:
This is a bad idea, but not because two pins seem to be connected directly. They're not; there is a load (the motor) between the pins, and that motor will take care of different levels between the pins. High and low will make the motor turn one way, low and high the other way, and the same level on both pins will stop the motor.
Why is this bad? An I/O pin can only supply a limited current, and even for a small motor that will peak rather high. If you run the motor for some time this way you will damage the I/O ports. An H-bridge, like you mention, is the solution.
Note that electric motors cause a lot of noise in the power supply, which may cause the microcontroller to reset all the time, so that your program doesn't work. (The motor may seem to start/stop all the time.) You need to decouple the power supply with capacitors.
You are not supposed to connect one pin directly to another pin because the current will destroy the electronics connected to the pins. The motor provides a small impedance and limits the current flowing (although the amount of current will increase if the motor stalls).
As to the other reason you missed for the MCU possibly being damaged, the answer is that it is absorbed by the input protection diodes and subsequently the supply.
Another problem here is when running a motor you want to include a 'flyback diode' to prevent damage from voltage spikes, which is a problem with loads like motors.
See this article for details.