Why does the setting sun appear red ?

The reddish appearance of sun is explained by Rayleigh scattering.

Scattering : When light is incident on small particles it is absorbed by them this absorbed light is then send into all direction. This phenomenon is called scattering. Rayleigh has theoretically show that the amount of scattering is inversely proportional to the fourth power of wavelength when size of molecule $\mathrm{a}<<\mathrm{\lambda }.$
 i.e intensity of scattered light $\propto \frac{1}{{\mathrm{\lambda }}^4}$. This is called Rayleigh scattering.
During sunrise or sunset when the sun is at the horizon, the sun rays have to pass through a large distance in the atmosphere to reach earth, hence suffer maximum scattering. Therefore, sun appear reddish during sunrise and sunset.