According to the "angle of regard" hypothesis, the Moon illusion is produced by changes in the position of the eyes in the head accompanying changes in the angle of elevation of the Moon. Though once popular, this explanation no longer has much support.
When the Moon is high, the clouds it is against are closer to the viewer and appear larger. When the Moon is low in the sky, the same clouds are further away and appear smaller, giving the illusion of a larger Moon.
