Imagine an orange and white circus tent. Now imagine that made out wool in Minecraft - and that's just about what it is! It is a gigantic orange and white domed building just like the official Stampy colors set on the far end of the Funland.
The circus isn't really a game, it's more of a fun attraction, which is why it is suitably set in the Funland. Inside the circus is an array of wooden seats for you to plonk your backside, whilst you watch people go across the tin iron bars tightrope, battle the terrifying loose pig, and... sorry what was that? Oh, and apparently getting fired out of a cannon..? Yes.
If you would like to see the Circus being built, it's this video:
Or, if you would like to see the big show (which, yes, does involve someone being fired out of a cannon), it's this video: