Circulating supply counts tokens that are tradeable in public markets, excluding team allocations under vesting, treasury reserves, and tokens reserved for future distribution. It's the denominator in market cap calculations (price × circulating supply).
Circulating supply numbers are routinely manipulated to flatter market cap and dilute scrutiny of insider holdings. Projects sometimes count team tokens locked in revocable contracts as "non-circulating," or exclude treasury holdings that get spent into the market every quarter. CoinGecko and CoinMarketCap apply their own definitions, which is why their numbers often disagree.