Perhaps the most well known explanation is the  Size-Contrast theory. This states that the perceived angular size of the moon is proportional to the perceived angular size of objects around it.Near the horizon, the moon is close to objects of a size that we know, such as trees, buildings and so on. And since it is comparable in size to these familiar objects, it appears larger. This is related to the famous Ebbinghaus illusion in which the apparent size of a circle depends on the size of circles near by.

Moon Illusion: New Theory Reignites Debate Over Why Moon Appears Larger Near the Horizon | MIT Technology Review Saturday, February 15, 2014 @ 3:53pm