Imagine a perfect white point in an empty black room. The point has no height, and no width. If you focus an optically perfect lens on that point, it forms a perfect point on the film as well. If, however, you focus slightly in front of or behind the point, the point will image on the film as a small blurry circle. If that circle is small enough, it will still look like a point when enlarged for printing.

The “circle of confusion” is typically calculated as the largest on-film circle that you see as a point when you make an 8-by-12 print and view it from a “normal” viewing distance, typically 2-3 feet. Anything larger is seen as a small circle, and is therefore perceived as out of focus.

In short, a Circle of Confusion delineates the most out of focus an image can be while still appearing in focus.