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The circuit size or feature size refers to the level of miniaturization of the processor. To make more powerful processors, more transistors are needed. In order to pack more transistors into the same space, they must be continually made smaller and smaller. As processors get faster and denser, power consumption and heat generation become a big concern as well. Circuit size is a major limiting factor in processor speed, largely due to heat generation issues. It also has a major impact on die size.
Technology advancements continue to allow circuit sizes to shrink and shrink. It was once considered "impossible" to shrink the circuit size below 1 micron; most processors today actually now use a 0.35 micron process, with 0.25 the current state of the art in the latest chips and 0.18 micron processors looming in the near future. It is now thought that current technology can eventually be shrunk to as low as 0.08 microns. This will make possible a whole new generation of very fast, low-power devices.
Next: Die Size