"Circulation" is a term commonly used when talking about interiors The first meaning you may be thinking about regards air flow, and while that is critical to indoor comfort, this type of circulation is about how people navigate through a space.
When you're arranging a room, think about how you will move through and occupy it. Where will you sit? What path will you take getting there? Is there a sharp table corner jutting into your path? If so, think about rearranging. It's important to create easy flow in a room.
One way you can identify current circulation paths is by drawing a floor plan of the room and, using brightly colored pens, marking the paths taken in different scenarios. That should indicate where the furniture arrangement is successful, and where it could be revised.
*A note regarding indoor air conditions: four key elements are required for comfort: temperature, humidity, circulation and ventilation. Circulation describes the way the air is moving through the space. Ventilation describes fresh air entering the space and "old" air leaving it. A comfortable temperature is around 72 degrees Fahrenheit and a comfortable humidity range is approximately 30%-50%.