Question

What is shown in this diagram?

Answer 1

Atmospheric refraction.

Answer 2

ATMOSPHERIC REFRACTION

You must be familiar with 'refraction'. When a light ray passes into a medium which has a different optical density than that of the previous medium, the ray bends towards or away from the normal (perpendicular).
Since when the latter medium in the case mentioned above, i. e., earth's atmosphere, is optically denser than that of the sun, hence the ray of light from the sun to the eye of the observer bends towards the normal and enters his eye.
But, human eye cannot imagine bent light and hence, percepts the ray as a straight one and thus sees the sun straight above the horizon (where it actually isn't!). This effect is called the "apparent position of sun due to refraction of light" .