Angular Size and Diffraction Limit - Question

This one has been on my mind for a few days now. I have been trying to make sense of the whole angular size and diffraction limit "explanation" flerfers use to explain why ships disappear over the horizon bottom up. I just quickly explain my understanding of the argument and hope someone out there can join the dots as I haven't got a clue. A note for flat earthers: Yes I understand what the diffraction limit is and how it pertains to resolution. I struggle to understand how this results in ships disappearing over the horizon as their angular size clearly exceeds the diffraction limit. Credit given where credit is due: the image of the boat is taken from https://www.youtube.com/watch?v=F5Gl28xuvnI&t=11s and is used under fair use.