/\ Exactly. Whenever you post an update, pic, link, whatever, both on the site, and the app, you select which circles it goes to. There's "Public" which means it goes to all your circles as well as your public Google profile, there's "All your circles" which does what it says, there's "extended circles" which means friends of friends, basically, and then there's all your individual circles that you've created - in my case, I've got "Friends", "Family", "Music Industry", "Android People" etc. and you can select as many or as little circles as you want for each update.
This works well with the Location/Places check-ins on the mobile app, as well. For example, if I'm at a relatives house and I check-in there, obviously I'll push that check-in to the "Family" circle, but not any of the others. If for example I was at, let's say, a strip club though, I may want to check-in and have that pushed to my "Friends" circle but not my family one, lol. That's a key level of difference here that makes the service far more useful compared to other social networks.