Final answer:
Objects appear larger inside water due to the refraction of light. This occurs when light travels and bends from a denser medium (water) to a less dense medium (air). This bending of light causes the object to appear above its actual position, hence seeming larger.
Step-by-step explanation:
Objects appear bigger inside water when seen from outside due to the phenomenon known as refraction of light. When light travels from one medium to another, its speed changes and it bends. More specifically, when light passes from water (a denser medium) to air (a less dense medium), it bends away from the normal line. This is because the index of refraction of water is greater than that of air. This bending causes the object to appear at a location that is above its actual position, hence making it appear larger.
A familiar example of this is observed when looking at a fish tank. As shown in Figure 1.12, the same fish may seem to be in two different places because light changes its direction when it leaves the water and enters the air. Therefore, the distorted image we see is due to the refraction of light.
Reflection, diffraction, and dispersion of light do not contribute to this illusion. Reflection is the bouncing of light from a surface, diffraction is the spreading of light when it encounters an obstacle, and dispersion is the splitting of light into its spectrum colors. None of these processes directly relate to the change in the size appearance of objects in water.
Learn more about Refraction of Light