Strafing is the process of moving your character to the left or right without actually turning, so that you still face the same direction when you move to the sides. You can also move forward or backward at the same time, so that you move in a diagonal direction.
Circle-strafing is a variation of strafing important in many shooting games that use the WASD + Mouselook control set up. It is when the player constantly strafes in a circle around the target, utilizing both the A or D key to constantly strafe in one direction, but also constantly adjusting the mouse cursor to aim towards the center of the circle. Some games like Infantry Online have much more complicated ways of circle-strafing due to lack of traditional Mouselook & WASD controls, and because it is not a First person shooter.
Games using lock-on or Z-Targeting lock the players in a circle-strafe for easier combat.