You sensibly say 'appears to be' larger than the stars which shows that you know it's possible that there are larger objects in the sky. Generally speaking, you will know that something near to you seems larger than something that is at a distance even when you know that distant object is larger.
For instance, if you put a tennis ball on the table directly in front of you it will look larger than your father's head if he is at the bottom of the yard! That's the same for the moon. It circles our planet Earth and in a way belongs to Earth.
It's much nearer than the sun, much nearer than Neptune, which you may have seen through a telescope looking like a dot in the sky. That's why the moon looks larger, when you probably know that Neptune is a large planet.