Eddy currents are circular because they form in response to changing magnetic fields, creating loops of electric current within conductive materials. When a time-varying magnetic field is applied, it induces an electromotive force (emf) that causes these currents to circulate. The term "short circuit at the molecular level" refers to the way these induced currents can disrupt the normal flow of electricity, leading to energy losses in the material. Understanding this phenomenon is crucial for improving the efficiency of electrical machines like transformers. Overall, eddy currents play a significant role in electromagnetic applications and energy dissipation.