The Curved Trap
A magnifying glass is a 'convex' lens, which means it is thicker in the middle and thinner at the edges. When light rays from a tiny object hit this curved glass, they are bent inward toward a single point. This bending of light to a focus is the first step in making things look bigger.
Stretching the View
After the light rays cross at the center, they continue traveling and spread back out before they reach your eye. Your brain is used to light traveling in straight lines, so it assumes the light rays came from a much larger source than they actually did.
The Virtual Image
Because your brain 'traces' the wide light rays backward, it creates a 'virtual image' in your mind. This image looks like a giant version of the bug sitting right behind the glass. The bug hasn't actually grown; the glass has just tricked your eyes into using more of their 'pixels' to see it.