The question “Why do stars twinkle?” is typically given a superficial answer that satisfies most people. However, as is often the case for physics-related questions about everyday phenomena, a more complete explanation is surprisingly rich and somewhat subtle.
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When a star is viewed through a telescope, the position does change. The viewer then sees a slightly blurred image that represents the average position of the star in the field of view of telescope. This motion is only apparent with the magnification provided by the telescope and not apparent when viewed with the unaided eye.
As an aside, it is also interesting to consider whether diffraction of light could interfere with these effects. Interestingly, the answer is almost but not quite. The typical angular error due to diffraction is roughly the ratio of the wavelength of light to the diameter of the lens. In our case, this ratio is about 5.5 × 10−7 m/8 × 10−2 m = 0.68 × 10−5 rad, which is comfortably less than the lens deflection angle of 4 × 10−5 rad. Therefore, by a slight margin, diffraction is not a prominent effect in this situation.
It is interesting to note that many popular treatments of twinkle get this point wrong, likening the refractive elements that cause twinkle to prisms casting rainbows. This idea, while seemingly plausible, is quantitatively incapable of explaining the observed color.