According to the definition of Circles in Profile and Privacy:
Circles are groups of people you share content with. The names of your circles and who you add to them are visible only to you, though you can set whether the list of people in all of your circles is visible in your public profile.
BUT when someone posts something to one or more of his/her circles, any member of those circles can see up to 21 other members that received the post and the total number of recipients.
That means that for circles less than 21 members, all of them can see the other members in your circle once you post something only to that particular circle!
By me, that’s contradictory. At least!
See who a post was shared with in the stream
When someone posts something in the stream, you can tell if it was shared publicly, to extended circles, or to a limited group. When you comment on or +1 something in the stream, everyone who can see the original content will be able to see your contribution.
If a post was shared with a limited group of people, you can click Limited at the top of the post to see the profile pics of up to 21 other people who can also see that content, as well as the total number of people on the post. If you hover over a photo, you’ll see that person’s name and can click over to their profile, or add them to a circle.
If you initiated a post in the stream, clicking Limited at the top of that post will show you the profile pictures of everyone you shared with. Only the person who started the post can see this information. If you chose to share with your extended circles in addition to other people, clicking Limited will only show that you shared with your extended circles–specific people won’t be identified.