The phenomenon described, where the sun appears to be at an altitude higher than its actual position at the time of sunset, is due to the refraction of light in the Earth's atmosphere. Therefore, the correct answer is:

Refraction of light

As the sunlight passes through the Earth's atmosphere, it encounters different layers of air with varying densities. This variation in density causes the sunlight to refract, or bend, which results in the apparent change in the sun's position. This is why we often see the sun slightly above the horizon even after it has physically set.