Discovered by German psychologist Hermann Ebbinghaus, this optical illusion was popularized by British psychology Edward B. Titchener in 1901.

Thus known as the "Ebbinghaus illusion" or "Titchener circles," the effect illustrates how our brain "uses context to determine the size of objects." Since the blue circles surrounding the orange circle on the left are so large, the orange circle looks smaller in comparison. Juxtapose that with the tiny blue circles on the right, and the orange circle appears relatively larger.

In case you're interested, this explanation by the Guardian breaks it down further.