Q:
What is the reason behind feeling insignificant and small when looking at stars in the night sky? Can you share your thoughts on this?

A:
It's because we know, because we're taught, that when looking at the stars we're looking across unfathomably vast distances at unimaginably huge objects. In comparison to those astronomical scales, we're tiny and miniscule.

It may not only be about sizes and distances, but time scales too. We know that those stars have been there for billions of years and will be there for billions more--since long before we were born and until long after we'll die. It highlights our mortality and the relative briefness of our lives.