It’s all a matter of perspective. :)
The moon is over 2000 miles across; it only looks small because of the distance. Because it’s so far away, moving around on earth doesn’t really change its apparent size. But as you walk away from a building, it looks a lot smaller a lot faster. Line them up at the right distance (this fellow was about 15 miles away from the observatory) with a lens long enough that the moon fills the frame, this is the result.
You’re both wrong. The moon illusion is still a mystery. Refractive models don’t work as refraction artificially elevates an objects apparent position in the sky in relation to it’s true position. That’s why you can’t use a sextant to navigate with stars that are close to the horizon.
It’s not simply a cognitive illusion such as perspective, as monocular lenses and mechanical recording devices also “see” it. When I was last in college in the 1990’s it was a mystery we studied in astronomy, and a quick search before posting here confirms that it still hasn’t been solved.