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 THOUGHT OF THE DAY:     
"As a rule, what is out of sight disturbs men's minds more seriously than what they see." - Julius Caesar, from The Gallic War
This works both ways; the unknown can be more frightening but also more desirable.

I think Caesar was putting his finger on something very deep in human psychology.

What is unseen gives the imagination room to work. A wolf in the forest may be less frightening than the rustling in the darkness that might be a wolf. The actual enemy has limits; the imagined enemy has none.

But as you say, the same mechanism creates desire. The unknown island beyond the horizon, the unopened letter, the mysterious stranger, the next scientific discovery—all can become more attractive than the reality ever proves to be. Much of romance, exploration, religion, and speculation depends on that.

In economics there is even a saying that markets hate uncertainty more than bad news. Investors often react more calmly to a known loss than to not knowing what the loss might be.

Perhaps the general principle is that the mind dislikes blanks. When information is missing, it fills the gap itself, often with material drawn from hopes or fears. Whether the result is terror or longing depends largely on which of those two emotions is stronger at the moment.

Caesar would have understood that well. Half of warfare is not what the enemy is doing; it is what people imagine the enemy might be doing beyond the next hill.

I've noticed that quite often a person can look most attractive at a distance or from behind, disappointing later close up.

That's a very human observation, and it fits neatly with the same principle.

At a distance, many details disappear. You see posture, movement, proportions, confidence, the way someone carries themselves. Your mind fills in the missing information, often in the most favorable way. From behind, there is even less information, so imagination has more room to operate.

When you get closer, reality supplies details that imagination had been inventing. Sometimes the person turns out to be even more attractive than expected, but often the imagined version was optimized by your own preferences and expectations. Reality has the difficult task of competing with an idealized construction of your own making.

Artists and photographers have long exploited this. A silhouette, a figure in mist, a glimpse through a doorway—these can be more evocative than a fully illuminated portrait. Suggestion is often more powerful than disclosure.

There's also an interesting asymmetry: once you've seen the real person, it's hard to recover the mystery. The imagination thrives on incomplete information, but reality is stubbornly specific.

Your observation reminds me of the old line that beauty is partly in the eye of the beholder because the beholder contributes more to the picture than he realizes. At a hundred yards, the beholder may be doing half the work.

Yes, imagination is the factor.  With fear it is that we imagine worst case scenarios, with hope it is that we imagine best cases.

Exactly. The imagination is not merely filling in missing information; it is often filling it in selectively.

When we are afraid, imagination behaves like a risk manager. It asks, "What is the worst thing this could be?" and then elaborates on that possibility in vivid detail. Evolutionarily, there is some sense in that. A false alarm is usually cheaper than overlooking a genuine danger.

When we are hopeful or attracted, imagination reverses direction. It asks, "What is the best thing this could be?" The distant figure becomes beautiful, the new acquaintance becomes fascinating, the investment becomes a fortune, the unexplored country becomes a paradise.

Reality's role is often to narrow the range of possibilities. Before we know, there may be a thousand futures, some dreadful and some wonderful. After we know, there is only one. That can be a relief or a disappointment.

This may be one reason anticipation is such a powerful emotion. The period before a concert, a journey, a reunion, or even opening a gift can sometimes be more emotionally intense than the event itself. During anticipation, imagination is still free to roam among the best possibilities. Once the event arrives, possibility collapses into actuality.

The Greeks had a word, elpis, usually translated as "hope," but it also carried the sense of expectation—of what might be. Much of human emotional life seems to be lived not in the present reality but in that zone of imagined possibilities between ignorance and certainty.