Pinhole projection is a tiny hole that means all the light rays go from a single point in the scene to a single point in the projected image. That 1 to 1 relationship is how it projects a clear image.
The longer the tube the bigger (and dimmer nothing is free in optics) the projected image (if you made a pinhole projector that had the pinhole on earth and the screen 1 AU away you could project a very dim image of the sun’s surface the same size as the sun).
By shading the screen, we increase the contrast between the relatively bright solar image and the shadows.
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