Why does the Moon appear larger when it's on the horizon compared to when it's high in the sky?

The Moon appearing larger on the horizon is primarily an optical illusion rather than a physical phenomenon. Contrary to common assumptions, the Moon is actually about 1.5% farther away when on the horizon and atmospheric refraction slightly compresses its appearance rather than magnifying it. This same illusion affects constellations, which also appear larger near the horizon. The phenomenon has puzzled scientists since Aristotle's time, and while atmospheric effects have been ruled out as the primary cause, researchers continue investigating how our visual perception and psychological factors contribute to this enduring celestial mystery.