A natural approach to mapping the Earth is to imagine a cylinder wrapped around the equator. Points on the Earth are mapped to points on the cylinder. Then split the cylinder so that it lies flat. There are several ways to do this, all known as cylindrical projections.
One way to make a cylindrical projection is to draw a lines from the center of the Earth through each point on the surface. Each point on the surface is then mapped to the place where the line intersects the cylinder. Another approach would be to make horizontal projections, mapping each point on Earth to the closest point on the cylinder. The Mercator projection is yet another approach.
With any cylindrical projection parallels, lines of constant latitude, become horizontal lines on the map. Meridians, lines of constant longitude, become vertical lines on the map. Cylindrical projections differ in how the horizontal lines are spaced. Different projections are useful for different purposes. Mercator projection is designed so that lines of constant bearing on the Earth correspond to straight lines on the map. For example, the course of a ship sailing northeast is a straight line on the map. (Any cylindrical projection will represent a due north or due east course as a straight line, but only the Mercator projection represents intermediate bearings as straight lines.) Clearly a navigator would find Mercator’s map indispensable.
Latitude lines become increasingly far apart as you move toward the north or south pole on maps drawn with the Mercator projection. This is because the distances between latitude lines has to change to keep bearing lines straight. Mathematical details follow.
Think of two meridians running around the earth. The distance between these two meridians along a due east line depends on the latitude. The distance is greatest at the equator and becomes zero at the poles. In fact, the distance is proportional to cos(φ) where φ is the latitude. Since meridians correspond to straight lines on a map, east-west distances on the Earth are stretched by a factor of 1/cos(φ) = sec(φ) on the map.
Suppose you have a map that shows the real time position of a ship sailing east at some constant rate. The corresponding rate of change on the map is proportional to sec(φ). In order for lines of constant bearing to be straight on the map, the rate of change should also be proportional to sec(φ) as the ship sails north. That says the spacing between latitude lines has to change according to h(φ) where h'(φ) = sec(φ). This means that h(φ) is the integral of sec(φ) which equals log |sec(φ) + tan(φ)|. The function h(φ) becomes unbounded as φ approaches ± 90°. This explains why the north and south poles are infinitely far away on a Mercator projection map and why the area of northern countries is exaggerated.
(Update: The inverse of the function h(φ) has some surprising properties. See Inverse Mercator projection.)
The modern explanation of Mercator’s projection uses logarithms and calculus, but Mercator came up with his projection in 1569 before logarithms or calculus had been discovered.
The Mercator projection is now politically incorrect. Although the projection has no political agenda — its design was dictated by navigational requirements — some people have gotten bent out of shape over the way it exaggerates the area of northern countries.
For more details of the Mercator projection, see Portraits of the Earth.