* Distance: The most important factor is distance. The Sun is our closest star, a mere 93 million miles away. Other stars are vastly farther away, some even thousands of light-years distant. This immense distance makes them appear as tiny pinpricks of light.
* Luminosity: While some stars are actually larger and brighter than the Sun, they appear small because of their distance. The amount of light we receive from a star decreases drastically with distance.
* Our Atmosphere: Our atmosphere also plays a role. It scatters light, making stars twinkle and appear less sharp.
Imagine this: Imagine a tiny light bulb, like a Christmas light, in your room. It looks fairly bright. Now imagine that same light bulb placed miles away. It would be almost impossible to see, even though it's the same size. This is similar to how we perceive stars compared to the Sun.