Circulating supply drives the headline market cap you see on data sites. It is an estimate, not a measured figure, and different providers classify treasury and foundation holdings differently.
A low circulating fraction is the classic low-float setup: a small number of tradable tokens can be pushed to a high price, implying a valuation the full supply could never support.
Example: 5% circulating at a $1 price implies $50m circulating cap on a 1bn supply, but a $1bn fully-diluted-valuation. Every unlock adds supply against demand that must grow just as fast to hold the price. Compare with total-supply and max-supply.
Related: total-supply, max-supply, fully-diluted-valuation, token-unlock