... Not quite sure I understand why, but using that rear pinhole sight to look through at the red dot is as sharp...
Same reason people squint to see better. A small aperture provides greater depth of field.
Shooters have been using these (or similar) stick on apertures for decades to improve their sight picture.
Even in my youth, I experimented with a small hole in a piece of electrical tape stuck on my glasses for pistol bullseye shooting.