How does refraction change the way objects look?

Light has a different speed depending on the medium it is travelling through, so it will "diffract" every time it passes from one transparent medium to another. It changes its angle of travel so that if you add the time of travel through both media, it will always be the shortest time. (If you had to run, then swim to a point, you wouldn't travel in a straight line; you'd find a path that made the swimming distance shorter, because we swim slower than we run. That is what light does.)

How can light 'figure out" the quickest path? google "Richard Feynman light" for a genius explanation of how light finds the least-time path when it diffracts between media. It is a beautiful thing...