How does this illusion - that I just inadvertently created - work? As I was working on a basic chess application for Android, I loaded some chess clip art into my imageviews. Then this happened. Look closely at the top two rows.



At first I was startled. My imageviews had reformatted themselves! But no. All the squares are still identically sized. 

Question is this: How does this image fool our minds? What can illusions like this tell us about how the brain is wired?
This is likely related to other illusions of relative size, such as the  Ebbinghaus (A) and Delboeuf (B) illusions. 



These illusions show that perception is not a 1:1 representation of retinal input. Instead it is a mental (re-)construction. 

As reviewed by Mrucek et al:


  an object's size is not inherently represented in the size of its projected retinal image. Rather, the perceived size of an object is constructed by integrating multiple sources of information including, but not limited to, retinal image size, physical and perceived distance (Berryhill, Fendrich, &amp; Olson, 2009; Boring, 1940; Emmert, 1881; Ponzo, 1911), an object's geometrical and textural properties (Giora &amp; Gori, 2010; Kundt, 1863; Lotze, 1852; Oppel, 1855; Helmholtz, 1867; Westheimer, 2008), knowledge of an object's typical size (Konkle &amp; Oliva, 2012), and the relative size of different objects in a scene (Coren &amp; Girgus, 1978; Roberts, Harris, &amp; Yates, 2005; Robinson, 1972).


A number of factors produce assimilation and contrast effects in size (as in your example), central variables seem to be the distance and the similarity of target and inducing stimuli (Roberts et al. 2005).

This is getting a little bit off topic, but Mruczek et al. (2014) show that dynamic visual aspects can feed into this illusion too. Also check out the StarTrek illusion which also has a relative size component. Isn't that cool? The name alone...

These illusions may seem to be cute effects. However, they have important real world consequences. For example, Wansink and van Ittersum (2012; Ittersum &amp; Wansink, 2013) investigated the effect of plate size on consumption. Imagine that the white circle in picture B is the plate and that the black cirle is your dessert. If you have a big plate you eat more, which is (also) related to the Delboeuf illusion. These illusions seem difficult to counteract:


  Even a 60-min, interactive, multimedia warning on the dangers of using
  large plates had seemingly no impact on 209 health conference attendees, who subsequently served nearly twice as much food when given a large buffet plate 2 hr later.


I could go on..., sorry.

References

Ittersum, K. V., &amp; Wansink, B. (2012). Plate Size and Color Suggestibility: The Delboeuf Illusion’s Bias on Serving and Eating Behavior. Journal of Consumer Research, 39(2), 215–228. http://doi.org/10.1086/662615

Mruczek, R. E. B., Blair, C. D., &amp; Caplovitz, G. P. (2014). Dynamic illusory size contrast: A relative-size illusion modulated by stimulus motion and eye movements. Journal of Vision, 14(3), 2. http://doi.org/10.1167/14.3.2

Roberts, B., Harris, M. G., &amp; Yates, T. A. (2005). The roles of inducer size and distance in the Ebbinghaus illusion (Titchener circles). Perception, 34(7), 847–856.

Wansink, B., &amp; van Ittersum, K. (2013). Portion size me: Plate-size induced consumption norms and win-win solutions for reducing food intake and waste. Journal of Experimental Psychology: Applied, 19(4), 320–332. http://doi.org/10.1037/a0035053