To derive the formula for the magnetic field of a circular loop around its axis, it's crucial to understand the relationship between the differential length element (dl) and the radius vector (r). The discussion clarifies that dl is considered perpendicular to r because of their respective orientations in a 3D model. Visualizing a circle on a horizontal surface with a vertical axis helps illustrate that r lies in the plane of the circle while dl extends out of the plane. This geometric perspective confirms the perpendicular relationship, aiding in the derivation of the field formula. Understanding this concept is essential for accurately calculating the magnetic field generated by the circular loop.