Is it because of the atmosphere (which i’ve heard)? Or is it an illusion(which i’ve also heard)?
Cecil addresses your question in Why does the moon appear bigger near the horizon?, which is also available in book form as part of More of the Straight Dope (page 110). He discounts the atmosphere theory, and sides with the illusionists.
The short answer is that it is an optical illussion and the angular measurement is the same (in fact, a bit smaller) than when it overhead.
And welcome to the Boards. The main Straight Dope page has a huge reservoir of information like this easily found with the Search function. By doing that before a General Question, and by doing a Message Board search before posting something that may have been done before, you will save a lot of people for rolling their eyes :rolleyes: and getting sarcastic.
Ok, cool! I had heard it was an illusion, but it just seems so much bigger! Thanks guys! 
Cecil’s paperclip response has always been less than rigorous in my mind. You can move your shoulder, head or elbow a little and are measuring something different.
http://www.lhup.edu/~dsimanek/3d/moonillu.htm by Donald E. Simanek has the best explanation and says that photographic negatives show that there is very little difference in the size (which assumes he did just that with a fixed focal length lens) and then explains the optical illusion.
A beautiful illustration that the Moon Illusion is indeed just that:
http://antwrp.gsfc.nasa.gov/apod/ap020130.html
This page also has some links to some exhaustive webpages with various hypoetheses to explain the phenomenon.
Next time you see a huge-looking moon on the horizon, look at it up-side down. Stand on your head, or bend over and look at it from between your knees, or whatever your acrobatic ability and/or dignity will permit. The moon will be magically reduced to its normal size! Crazy!
I will second Simanek’s page, and note that I relied on it fairly heavily for the chapter in my book about the Moon Illusion. Tersely, it’s a combination of the Ponzo Illusion and the fact that we perceive that the sky is bowl-shaped (flattened near the zenith), making the horizon look farther away than the zenith.
It is an illusion, and not real. It’s the most convincing illusion I have ever seen, but nonetheless, it ain’t real.
Everyone is talking about the moon illusion, which has been adequately explained. But what about the Sun? I’ll argue that it looks bigger near the horizon due to atmospheric refraction, which also causes the orange color and the apparent change in shape to oval.
Here’s an article about this from January 2000 with animated demonstrations: http://www.research.ibm.com/resources/news/20000103_moon_illusion.shtml
Atmospheric refraction makes the sun smaller in the vertical direction, and no change in the horizontal direction. If something appeard wider because of atmospheric refraction, do all constellations appear wider near the horizon? How can everything along the horizon get wider and still fit in 360 degrees?
It is exactly the same phenomenon as with the moon. Here is how I learned it in my Psychology of Perception course many years ago, which explains the Ponzo Illusion too.
Mathematically…
Perceived size = retinal image size * perceived distance.
In normal circumstances, when the cowboy rides off into the sunset for example, the retinal image size decreases as the perceived distance increases, so the perceived size stays the same. This is how our brain understands that everything is not actually changing size when the retinal image size changes.
With the moon (or sun) setting, as others have indicated, the perceived distance increases due to the fact that people perceive the sky as a flattened bowl, but the retinal image size stays the same, therefore the perceived size of the moon (or sun) when it is at the horizon is larger than when it is overhead.
This effect is apparently magnified slightly by the trees and houses on the horizon, but this is not necessary for the effect to occur, as anyone who has seen the sun set on the ocean horizan can attest.
So why is it that the sunset looks decidedly non-circular? scr4’s explanation about refraction in the horizontal direction makes sense, but I’ve never seen the moon look that way. Why the difference?
So why is it that the sunset looks decidedly non-circular? scr4’s explanation about refraction in the horizontal direction makes sense, but I’ve never seen the moon look that way. Why the difference?
I used to think (adamently) that it was a refraction effect, until one day I actually measured the ‘giant’ moon by holding up a pencil. It is amazing how much smaller it looks when you’re measuring it objectively. It is, in fact, the same size as when it’s directly overhead, much to my disappointment.
The sunset looks non-circular because of refraction. It’s hard to describe without diagrams, but basically you are looking through a thick, curved layer of air. That distorts the image.
The moon should look exactly the same at the same position. I’m not sure why you haven’t seen it. Maybe because the moon isn’t very bright when it’s so low in the sky and you haven’t noticed it?
I was another one who was never sure it was an illusion. Looking at constellations convinced me.
Currently Orion looks hyooge compared to a few months ago, and Leo looks like it’s getting bigger as it moves from the zenith to the horizon.
Crap. Sorry for the double post.
I believe I’ve seen my fair share of moonrises and moonsets; granted not as many as sunsets. (Sunrise? What’s that?) But I’ve never noticed the distortion effect. One factor could be moon phases - we’ve all seen the moon in different shapes, so a misshapen full moon on the horizon is not particularly remarkable.