When light travels from one medium to another medium it changes its direction, this phenomenon of light is known as refraction.
When light enters denser medium from the rarer medium it bends toward the normal line.
When it enters to rarer medium from a denser medium it moves away from the normal line.
When the light from stone crosses the water boundary it moves away from the normal line at some angle (water is denser medium and the air is rarer medium)
That's why we think that the object under water is closer than it really is and the stone at the bottom of a pond appears to be at a higher point.