A magick circle is a sort of mental space that we can create to perform our magick, spells, meditation, or other spiritual operation. The circle can be almost anything, for an advanced adept it can be purely mental and non-physical, but for the initiate or less experienced, the circle should be a physical boundary that separates them from the outside.
To keep things simple, a drawn circle on the dirt or sand if outdoors will suffice, some will pour salt in a circle around themselves, other practitioners use a cord tied to itself at both ends to create this sacred space, and that's exactly the purpose of it. This is to separate a space for yourself where you can allow yourself to express your authority over your life and create changes according to your will.
The circle will protect you from outside forces as well as amplify your spell, as the energy can gather and collect until your spell is completed and it can all be released to do its work and hopefully manifest in your life in the most positive and constructive way after the circle has been closed.
When working with energies and invoking other forces into our spells or magick work, the circle will allow us to harness the power during our ritual. If closed properly and if the practitioner can successfully ground his or her energy, the force of the spell and that of the other invoked energies will not spill out unnecessarily into the other areas of the practitioner's life.