Today we know this band of light is composed of countless numbers of individual stars and that we are among them. We're far out from the center of a thin disk. As mentioned earlier, the disk is thin and we are near the edge. They absorb and scatter light strongly in the UV and visible.
Stars appear dimmer and hence appear further away than they really are.
We can only see stars to about 1 to 2 kpc away in the visible. The True Picture Harlow Shapley deduced the correct size and shape of the Milky Way using variables in globular clusters. A small fraction of stars have brightness variations that are periodic. Although the periods from 0.5 to 100 days, any given star has a constant period. Luminosity is a function of period Period-Luminosity relation discovered by Henrietta Leavitt in 1908.