Why does the moon appear large in the distant horizon?

During clear skies, the moon can appear as a giant glowing orb when it is low on the horizon. The moon is actually not any closer than usual. What we are seeing is an optical illusion. This is known as the “ponzo illusion” or the “railroad track illusion”. 

If two blocks of equal size are inserted between railroad tracks, the distant block will appear larger. Due to the appearance of converging parallel lines, in this case railroad tracks, we perceive the “narrowing” upper portion of the tracks as being farther away as compared to the “wider” and nearer tracks. The tighter tracks makes the more distant block look larger. When we focus our attention to the horizon, the sky seems much more distant than it is overhead.