It is a Sacred space set aside for Ceremonies and Rituals of High Magic.
I am not going to go into major detail here... I am going to give you just the basics for your Curiosity.
Within the circle one can transcend the physical world and take the mind to deeper and higher levels of consciousness. It acts as a protection barrier from all Evil and unwanted Entities. From within this Magical Circle the Magician can Invoke and or conjure up any Demon or Angelic being that is desired for their bidding. Now take note that the Entities are conjured to appear outside of the circle and into the Triangle of the Solomon (Triangle of the Art). The Magic Circle is for the Magician to stand in along with those who might wish to witness a Magical operation as such. The Circle must always be cleansed and Consecrated to make it a Sacred Protection barrier.
There are many different Magic Circles that have been found throughout time from many different Grimoires. Most all have Sacred names of God and symbols that are inscribed all around the inside border of the Circle. By looking at the different Circles you will see that some have many many names that are hard to read..... these Circles would be impossible to make because if you can't read it... then you can't be sure you have the right names and this will serve as no protection.
You will see that there are also ones that are much easier to read and comprehend.... a much wiser choice.
Which Circle is the best?... that is for you the Magician to decide. I myself prefer one of my own making that contains names of God that I am used to invoking for protection.... not too intricate and not too simple. It must be right for you... for all your energy will be built up within this circle.
Now many of you whom think you know it all may want to write me and tell me that they have to be certain colors and so forth... I say Bullshit. What I am telling you comes from trial and error.... that is Experience. A Magic circle can be drawn in the sand or carved in concrete or painted on fabric. If they are painted on a surface they are usually in Black and White. All these methods of using a Magic Circle have worked for many famous Magicians/ Sorcerers for decades. If Aleister Crowley were alive today he would tell you the same.
Below are some of the Famous Magic Circles that have been used throughout time. There are others that can be found in different Grimoires, but these are enough to give you an idea of how they differ from each other and their similarities.