When a piece of paper with words on it is placed behind a clear jar of water the letters seem to change size. Some appear larger, and others appear smaller. Why does this happen? What is light doing to make the letters appear differently?

because of the process of refraction of light.

Explanation:

Note, the term refraction refers to the process which results in the bending of light as it passes through a medium. This bending of light can make objects become magnified (or larger), or even smaller.

In this scenario, as the light passes slowly through water it affects how we perceive the objects (the words on the paper) behind the jar (more likely a glass jar). In other words, the light combined with the water refracts (changes direction of) the lights our eyes can see, making the letters seem to change size.