For questions specifically about using and maintaining Google+ Circles.
Circles are the way you organize the People and Pages you follow on Google+. You organize them by how you think of them. Google+ starts with some default Circles (Following, Friends, Family) but you can add as many as you like.
People (and Pages) you follow can be in any number of Circles, although a Circle can only have 5,000 People (or Pages) in it.
A person will know you have added them to a Circle, but not the name of the Circle. Similarly, by default on your Profile page the people who are in your Circles will be listed, unless you turn that off for certain (or all) Circles.