Light and the images you see is coming from many different directions and needs to be focused into one point in your eye to see.
When you have blurry vision, this focus or focal point is slightly off so you are seeing multiple “images” at slightly the wrong place, this is what makes things look blurry.
When you look through a pinhole or small hole, a lot of those extra images are being blocked from reaching your eye so you don’t get as much blurriness. Less light is reaching your eye though so your vision is darker but sharper.
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