The phenomenon you are referring to is known as the "celestial sphere" or "celestial sphere model."
The celestial sphere is an imaginary sphere surrounding the Earth, on which all celestial objects, including stars, planets, and galaxies, appear to be projected. From the perspective of an observer standing on the Earth's surface, it appears as if all the stars are located on the surface of this celestial sphere, regardless of their actual distances from Earth.
The celestial sphere model is a useful tool for astronomers to study and navigate the night sky. It simplifies the complex three-dimensional nature of the universe into a two-dimensional representation, making it easier to understand and predict the positions and movements of celestial objects.
However, it's important to note that in reality, stars are at vastly different distances from Earth, and they are not actually physically located on a single, encompassing sphere. The celestial sphere is a conceptual framework that aids in celestial navigation and understanding the apparent positions of celestial objects as seen from Earth.