I do see how "circles" could be confusing, but isn't it also true that the circles we define may not be reciprocal or symmetrical in others' eyes? For example, I may consider someone an acquaintance but they may consider me a friend. Or I may consider someone as belonging to a book club circle but they may consider me as an acquaintance. To go to an extreme, a relative may consider me related but I may have had issues with that person and don't consider that person a relative (and just as a stranger, or an acquaintance).
I always understood the point of "circles" as how we privately define our personal world and our relationships with others, which may not necessarily be how those people view us. In comparison, I see Facebook's "lists" model less intuitive for people to understand and use.
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