The layers of air nearer to earth are denser than those above it. At sunrise and sunset when the sun is below the horizon, the light rays starting from the sun are incident on these layers. They pass through successively denser layers and thus get bent more and more towards the normal until they fall upon the eye of the observer O. To the observer O these rays appear to come from S' which is above the horizon. It is for this reason that the sun is visible to us a little before it rises above the horizon and so also till a little later it sets below the horizon. The difference of time is about 2 minutes each for an early rise and late setting of the Sun.
