There are several dozen papers that study the effects of cloud horizontal inhomogeneity on the retrievals of cloud optical thickness, but only a few of them deal with cloud droplet sizes. This paper is one of the first comprehensive attempts to fill this gap: It takes a close theoretical look at the radiative effects of cloud 3-D structure in retrievals of droplet effective radii. Under some general assumptions, it was found that ignoring subpixel (unresolved) variability produces a negative bias in the retrieved effective radius, while ignoring cloud inhomogeneity at scales larger than a pixel scale (resolved variability), on the contrary, leads to overestimation of the domain average droplet size. The theoretical results are illustrated with examples from Large Eddy Simulations (LES) of cumulus (Cu) and stratocumulus (Sc) cloud fields. The analysis of cloud drop size distributions retrieved from both LES fields confirms that ignoring shadowing in 1-D retrievals results in substantial overestimation of effective radii which is more pronounced for broken Cu than for Sc clouds. Collocated measurements of broken Cu clouds by Moderate Resolution Imaging Spectrometer (MODIS) and Advanced Spaceborne Thermal Emission and Reflection Radiometer (ASTER) are used to check simulations and theory with observations. The analysis of ASTER and MODIS data and associated derived products recommends against blindly using retrieved effective radii for broken cloud fields, especially if one wants to relate aerosol amounts to cloud droplet sizes.