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>who had constructed a perceptual model in which the sky was contiguous with the horizon, so that the moon was placed, as it were, in front of the sky, occluding it.

I have been looking at this sentence for a few minutes, and still have no idea what it is saying.

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I was confused by that as well. I think it's trying to describe this effect: http://en.wikipedia.org/wiki/Moon_illusion#mediaviewer/File:...

Thanks, I was wondering about that, too. That diagram helps explain it. But I still don't understand circle 3. According to perspective rules, shouldn't the moon appear much, much smaller, since it's so far away?

Circle 3 is saying that's how big the moon would look like if it was actually proportionally sized to the cloud, and actually "in the sky" as opposed to be 238,000 miles away.

Basically, the argument here is that we judge the size of things in the sky under the assumption that they are in the sky. But the moon is not; it does not follow the perspective rules of things that are actually close to us. The figure is saying that when we see situation 1, our brain assumes situation 3 will hold.

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