"Obviously" is the wrong choice of words. The sun is either very close and very small or it is very far away and very large. If it is very far away, from our point of view, perspective will make it appear small. You cannot rely only on your eyes to determine what is going on. You must do the science to confirm your observations.
Your hypothesis is that the sun is near and small. What experiment will you set up to confirm this?
Your hypothesis is that the sun traces a circle in a plane above and parallel to the surface of a flat Earth. What experiment will you do to confirm this?
Your hypothesis is that a sun that traces a circle in a plane above and parallel to the surface of a flat Earth will sink below a horizon. What experiment will you do to confirm this?
You have made many claims and created a few sketches but these are not scientific investigations. What experiments will you do to confirm that your sketches are accurate representations of what you actually see?
To merge into the horizon is not the same as to sink below it.
But other than that every thing else you say is correct to me and there needs to be confirmation of these other factors.
As I have said flat earth has more to prove but without a viable horizon model it would die right here.
--Dave