The name quasar comes from “quasi-stellar,” meaning star-like.
That description made sense in early photographs. Quasars appeared as tiny unresolved points of light rather than as extended galaxies, so astronomers initially considered explanations involving unusual stars or other relatively nearby objects.
The spectrum of 3C 273 changed the scale of the problem in 1963.
Its light contained bright emission lines that at first seemed unfamiliar. Maarten Schmidt recognized that they were actually known atomic lines shifted far toward longer wavelengths.
For very distant galaxies, cosmic redshift arises because the expansion of the universe stretches the wavelength of light while it travels toward us. If 3C 273’s redshift had that cosmological origin, the object had to be enormously far away.
That meant it was also extraordinarily luminous. A normal star could not explain the observed brightness from such a distance.
Other quasars showed the same pattern, and improved imaging eventually revealed galaxies surrounding many of the bright point-like sources.
The modern explanation is an active galactic nucleus. Gas and dust fall toward a supermassive black hole at the center of a galaxy, forming a hot accretion flow that can release tremendous amounts of radiation.
Quasars can still look like stars when their host galaxy is unresolved. What changed was the physical interpretation: the point of light is the brilliant center of an entire distant galaxy.