Aerial perspective was discovered and named by Leonardo Da Vinci, who used it in many of his works, such as the Mona Lisa, in order to suggest distance.
One of the best discriptions and images to explain this effect comes from the Art Studio Chalkboard by Ralph Larmann at the University of Evansville in the article ATMOSPHERIC or AERIAL PERSPECTIVE.
He states there: Aerial or atmospheric interference with visual perception causes loss of contrast, detail and sharp focus. The effect, which Leonardo called "the perspective of disappearance," tends to make objects seem to take on a blue-gray middle value as they increase in distance.
SIZE OF OBJECTS-smaller objects seem farther away (distortions can occur if objects are the same size or too close to the viewer).
OVERLAPPING OR SUPERIMPOSING-by partially covering one object with another it gives an appearance of depth (distortions also occur if viewer is too close).
TEXTURE-density increases as an object gets further away.
SPACING-objects clustered closer together seem farther away. Horizontal lines which get closer as they near the horizon line appear to be defining a recession in space.
FOCUS-objects lose detail as they recede into space.
BRIGHTNESS-objects are brighter when closer to the viewer, except for reflective surfaces.
SHADE AND SHADOW-darker shadows seem closer especially if overlapping other shadows.
UPWARD ANGULAR LOCATION-creates depth if juxtaposed to ground and sky lines, e.g. tall buildings.
COLOR-color intensity is much greater closer to the viewer and tends toward medium gray as it recedes.
This image from Larmann's article serves as an excellent visual aid to explain the effect of Aerial Perspective.