The celestial sphere is an imaginary sphere of infinite size surrounding the Earth with the stars embedded in its surface.

The Earth blocks half of this celestial sphere from view at any instant; where the two meet is your horizon.

But the Earth's rotation causes the stars to rise in the east and set in the west -- which, as you know, is what the Sun does.

Which stars you see depends on:

Points on the celestial sphere correspond to points on the Earth:

The ecliptic is the apparent path followed by the Sun around the celestial sphere as the Earth orbits the Sun.

Links: good graphic; cool movie; Terrestrial Celestial Sphere!