Why does the Sun appear larger during sunrise and sunset compared to its size during midday even though its distance from the Earth remains fixed all the day? It is only during the Winter when the Sun is away from the Earth and that too is due to the motion of Earth around the Sun, not due to the diurnal motion of the Earth. So is it some optical effect? If yes, what is it really? I apologize if the question has already been asked.
The previous answer is not wrong per se, but it only explains a distortion of bodies on the celestial sphere, not the effect you are describing. Edited: Refraction does not reduce the size of objects on the horizon, but it is not the reason for the perceived size.
What you are referring to is often called the Moon Illusion and there are multiple perceptive effects at play. What is important to understand is that our brain is only capable of deducing distance, that is, perceiving three dimensions, up two a certain and very limited range. So everything that happens on the celestial sphere has no depth for us at all: The brain does not have any information about celestial distances at all, and has to fill in the blanks. There are some really interesting phenomena resulting from this.
So the most plausible explanations are:
Apparent Distance: When viewing clouds at shallow angles on the sky, they appear noticeably smaller, compared to when viewed directly above, because they are, of course, farther away. The real, measurable, angular size is smaller. The moon or the sun on the other hand do not appear noticeably smaller, because their real distance does not change much when they move to the horizon. But the brain would expect them to be smaller, much as the clouds, or a plane, and hence perceives them as larger than they 'should be'.
Relative Size: Since the Sun is surrounded by nothing but sky when above, there is nothing to compare it to. When viewed at the horizon, there is actually things to compare the size with, which are all smaller, and hence the brain corrects for this.
I spent over 30 years at sea, and I can tell you that when you're out in the middle of the ocean the setting and rising sun sometimes seems to be much larger. Atmospheric conditions seem to influence this. If you wake up to a red sky and the sun looks huge on the horizon you can expect some nasty weather.
I think that the water vapor in the atmosphere, coupled with the oblique angle of the radiation from the rising sun, magnifies the apparent size.
Yesterday we had a super moon full moon. At moonrise I held a transparent ruler at arm's length and measured the size of the moon against the ruler. It was 7.5 mm. At 11 pm I held the same ruler at arm's length against the moon which was now high in the sky. It was only 4 mm. This is not imaginary. It is real and observable. The larger size is caused by a refraction of light when the moon is at the horizon because the light has to pass through greater amounts of atmosphere to reach you compared to when it is overhead. The same is true of the setting sun. In fact, I recall reading years ago (I believe in my daughter's physics book) that we are actually seeing below the horizon at sunset because of light is being bent by the atmosphere. This phenomenon is worldwide. It is not imaginary. As far as I know it is sound science.