The Diocese of Leiria opened a canonical inquiry into the Fatima events in 1922, interviewing surviving witnesses over several years. In October 1930, Bishop Jose Alves Correia da Silva declared the apparitions worthy of belief, permitting public devotion, and the Holy See canonized Francisco and Jacinta Marto in May 2017, citing the Fatima events in the canonization Mass. The church process weighed the visionaries testimony and the conduct of the devotion. It did not attempt a physical account of what the wider crowd at Cova da Iria saw.
The physical question is where skeptics have concentrated. The researcher Joe Nickell, writing in Skeptical Inquirer in 2009, argued that the reported solar effects match known consequences of staring at the sun for a sustained period: retinal afterimages, temporary color distortion and involuntary eye movement produced by the strain of trying not to look directly at it. He noted that observers outside the crowd, looking at the same sun from elsewhere in Portugal, reported none of the described motion, which tells against an actual astronomical event and toward a shared visual and psychological experience among people primed by months of anticipation to see a sign. The wide variation among the crowd's own accounts, some detailed and dramatic, some reporting nothing at all, is easier to reconcile with that reading than with a single external event visible identically to everyone present.
Sources Holy Mass and Canonization of the Blesseds Francisco Marto and Jacinta Marto, Fatima, 13 May 2017Holy See Press Office with The Real Secrets of FatimaJoe Nickell