What are Sundogs and why do they happen?

Sundogs, the term has been in use since the early 1600s and noone really knows why they are called this, the scientific name for sundogs is parhelia (singular parhelion). 

A sundog or mock sun, in meteorology, is an atmospheric optical phenomenon that consists of a bright spot to the left and/or right of the Sun. Two sun dogs often flank the Sun within a 22° halo.

The sun dog is a member of the family of halos, caused by the refraction of sunlight by ice crystals in the atmosphere. Sun dogs typically appear as a pair of subtly colored patches of light, around 22° to the left and right of the Sun, and at the same altitude above the horizon as the Sun. 

They can be seen anywhere in the world during any season, but are not always obvious or bright. Sun dogs are best seen and most conspicuous when the Sun is near the horizon.

Sun dogs are commonly caused by the refraction and scattering of light from plate-shaped hexagonal ice crystals either suspended in high and cold clouds, or drifting in freezing moist air at low levels as diamond dust. The crystals act as prisms, bending the light rays passing through them with a minimum deflection of 22°. As the crystals gently float downwards with their large hexagonal faces almost horizontal, sunlight is refracted horizontally, and sun dogs are seen to the left and right of the Sun. 

Red-colored at the side nearest the Sun, sundogs color farther out grade through oranges to blue. However, the colors overlap considerably and so are muted, never pure or saturated. The colors of the sun dog finally merge into the white of the parhelic circle.

The same plate shaped ice crystals that cause sun dogs are also responsible for the colorful circumzenithal arc, meaning that these two types of halo tend to co-occur. The latter is often missed by viewers, however, since it is located more or less directly overhead. 

A Sun halo, a circle of light that creates a circle 22° wide around the Sun, is a related phenomenon. As with sundogs, hexagonal ice crystals suspended in clouds refract sunlight to create the halo, sometimes also called an icebow, nimbus, or gloriole. Unlike sundogs, which generally only be seen when the Sun is near the horizon, the halo is visible even when the Sun is high. Sundogs appear along the 22° halo and disappear as the Sun rises.