The reason why the earth looks round from very high altitudes is because of Snell's Law. I'm sure you have seen that when you put a pencil halfway in a glass of water, it appears to be broken. This is because water is more denser than air and light rays bend when the density and temperature of the medium changes. This is known as the Snell Law.
Have you ever seen the outside temperature readings on an airplanes' info channel? It goes all the way down to a few degrees, because atmosphere gets much colder as you ascend. When one is looking down from a high altitude to the surface of the earth they are looking through an atmosphere that gets warmer and denser as it descends. This causes light rays from the earth to bend and makes the surface look curved - just like the pencil in the water getting broken. It's not a sharp break as in the pencil example but a smooth curve, because the temperature and density changes gradually, not suddenly.
When I get a chance I'll draw a diagram for visual effect.