Twinkling of Stars is Due to Atmospheric (A) Dispersion of light by water droplets (B) Refraction of light by different layers of varying refractive indices (C) Scattering of light by dust particles (D) Internal reflection of light by clouds

Answer – (B) Refraction of light by different layers of varying refractive indices.

Explanation : 

Earth has different atmospheric layers with different refractive indices or varying optical densities.

All the stars have their light from multiple refractive atmospheric layers of earth before reaching human eyes. Going from one layer to another makes the Ray of light bend, and the stars appear to be twinkling to human eyes due to this atmospheric refraction causing a difference in the actual position and the apparent position.