Our eye is a lens and lenses have a resolving power. The resolving power of a lens, physically speaking, is related to how good two closely separated points A and B can be distinguished as separate. If two such points A and B, separated by a distance $d$, are looked at, their images will be created on our retina.
When does the retina fail to recognize them as two separate images? To ask it differently, what sort of image formation at the retina does and does not allow it distinguish the images of A and B as separate?
This matter is agonizing me for a long time. I made Google searches but didn't find the exact answer I'm looking for: What kind of image formation "confuses/fools" the retina? If you answer this, please supplement it with a figure/drawing for a clearer picture. I am happy to assume that the points emit monochromatic light of wavelength $\lambda$. Thanks!