Final answer:
Red giants are formed as stars age and evolve away from the main sequence by simultaneously becoming more luminous and cooler. Their core contracts while the outer layers expand due to hydrogen fusion, resulting in the star appearing larger, redder, and more luminous.
Step-by-step explanation:
Stars go through different stages of evolution, and one of them is the red giant stage. During this stage, the star becomes more luminous and cooler. On the H-R diagram, the star moves upward (brighter) and to the right (cooler surface temperature). Red giants are formed when stars age and evolve away from the main sequence. Their core contracts while the outer layers expand as a result of hydrogen fusion. As a result, red giants appear larger, redder, and more luminous than when they were on the main sequence.