tl;dr
Circular reasoning means that a premise of your argument was the same as your conclusion. That means you haven’t established anything new. This can be useful if you’re stating a definition. Those need to give you back exactly what you started with, that is, be purely circular and tautological. You’re not supposed to introduce any new facts when you rephrase or simplify a statement!
You will sometimes see people argue that the good kind of circular reasoning isn’t really circular reasoning but something else, because their definition of circular reasoning says it must be unsound. That is a good example of circular reasoning.
If a more complicated argument turns out to be circular, all you did was waste your readers’ time. If people can’t agree on definitions, they’re actively harmful.
The Long version
You normally use definitions to rewrite a statement in an equivalent way. Rewriting your premise as your conclusion is circular reasoning. But that’s sometimes a useful thing to do! So: “Let us define man to mean adult male human. Socrates is a man. Therefore, Socrates is adult, male and human,” is logically sound circular reasoning. Not a very interesting argument, but a historian might legitimately need to explain that the primary sources say that Socrates was an anthropos, not a woman, a child, a supernatural being or a pony.
A tautology like that is normally thought of as trivial, even suspiciously so (which is probably why “tautology” has picked up the secondary definition, “playing word games to hide nonsense” or “overcomplicating things that much is a big red flag.”)
Some Examples from Mathematics
Back when I was young and brash, I used to ask on the first day of each math class, “Is this where we learn why one plus one equals two?” Finally, a classmate of mine asked me, “You do know that one plus one is defined as two?” (When I told this story over on Math.SX, people objected that he should’ve said, “Two is defined as one plus one,” and it started a little argument about whether both are equally valid from a certain point of view.) So, for a real-world example, we say “2+2 = 4” because it’s more convenient than “(1+1) + (1+1) = 1+1+1+1,” but if I were asked to prove that 2+2 = 4, I would replace all the terms with their definitions, then invoke the axioms that addition is associative and equality is reflexive. That is, we would show that “2+2 = 4” is a tautology under the definitions of 2, 4, + and = that the people we’re writing the proof for accept.
However, in some courses I’ve taken, that answer would not get me full points on an exam because the real purpose is to test my knowledge of a formal system we’ve been studying. I might instead be expected to substitute the definitions from, say, John Von Neumann’s model of arithmetic based on set theory, or Alonso Church’s model based on the Lambda Calculus. My argument from before would still be logically valid on its own terms, but would become unsound in this context because I’m no longer allowed to take the same definitions for granted. That is, “1+1 = 2 because 2 is defined as 1+1? That’s just circular reasoning. You were supposed to say that 1 is defined as {{}}, 2 is defined as { {}, {{}} }, and x+1 is defined as x∪{x} for all x. But not in the other course I’m teaching on Constructive Mathematics, which takes the concept of counting as a given and doesn’t accept set theory. If I give you the same question there, do the opposite.”
So that’s one way the same “circular reasoning” might or might not be accepted even in mathematics. There are still some forms of reasoning-from-definitions that are always considered fallacies, though: mathematicians would (almost always?) not accept a definition that introduced new premises. So, for example, you would not be allowed to define “the upper and lower floop of n” as “the lowest integers a and b, respectively, such that a/b × a/b = n” and then claim that the square root of 2 is rational by referring to “the floops of 2” as if such things existed. You’re no longer just making the exact same statement in an equivalent way; you’ve smuggled in a new premise, that the number 2 has floops, and it’s the exact same thing you’re trying to prove (that some fraction a/b is the square root of 2).
Likewise, everyone agrees that it’s a logical error to use Theorem 1 to prove Theorem 1, or—more likely to be an honest mistake—prove Theorem 1 from Theorem 2 and then use Theorem 1 in the proof of Theorem 2. Most math professors will therefore insist that you cannot use a theorem introduced later in the course to prove a theorem introduced earlier, unless you can prove the later theorem from earlier theorems and only earlier theorems. This is to save you from this form of circular reasoning. Once you’re no longer a student, this doesn’t work (or rather, it might be possible to enumerate the theorems of mathematics and enforce a partial ordering on them, but mathematicians haven’t), so it becomes especially important to declare the premises of your results explicitly, not smuggle any more in, so that other mathematicians can tell if using your result will make their own proof circular.
In the Wild
When you follow a debate that gets beyond formalism into value judgments (or, bless your heart, get into one), there are a whole lot more ways for this to go wrong. A lot of the words we use about ethics are loaded. Everybody¹ agrees that words like fairness and justice mean that something is good, and words like murder and abnormal mean something is bad.
So you will often see an argument where (for example) both sides agree that FREEDOM™ is good, and then since all serious disputes are between parties that cannot all have everything they want, both of them implicitly define FREEDOM™ to mean “My freedom to get my way,” and ask the other “Why should I be forced to allow you to?” If you wrote this out as What-Alice-Calls-Freedom and What-Bob-Calls-Freedom, it would be really obvious that both of them are talking past each other, or less charitably, have as their first principle, “I win.”
¹ That is, everybody it’s possible to have a productive conversation with at all.