A full moon rising behind buildings looks vast. The same moon three hours later, high overhead, looks ordinary. Nothing has changed: the moon’s angular diameter is about half a degree in both cases, and if anything it is very slightly smaller near the horizon, because you are further from it by roughly one Earth radius.
You can verify this yourself with no equipment. Hold a small coin at arm’s length against the rising moon and again against the high moon. The coin covers the same amount both times, even though your eyes insist otherwise.
An old problem
The illusion is recorded on cuneiform tablets from the library of Ashurbanipal in the seventh century BCE. Ptolemy discussed it. Ibn al-Haytham analysed it in the eleventh century. It has been studied continuously ever since, and there is still no fully agreed explanation.
The leading explanations
The apparent distance theory holds that we perceive the sky as a flattened dome rather than a hemisphere — the horizon feels further away than the zenith. Presented with an object of fixed angular size that the brain judges to be further away, the brain concludes it must be physically larger. This is the same mechanism as the Ponzo illusion, where converging railway lines make the upper of two identical bars look longer.
A competing account emphasises relative size: near the horizon the moon appears alongside trees, buildings and hills, giving the visual system a scale reference that it lacks against empty sky.
Neither explanation is complete. The illusion persists for pilots looking at a horizon with no objects on it, which is awkward for the relative-size account, and it can be affected by binocular convergence in ways the apparent-distance model does not predict.
Breaking it
Several tricks reliably destroy the illusion. Viewing the moon upside down, by bending over and looking between your legs, works. So does looking through a narrow tube that removes the horizon from view, or viewing it in a photograph — which is why pictures of a "huge" moon never look the way the moment felt, unless taken with a long lens that compresses foreground and moon together.