And the circular part isn't about the shape of the filter.
Polarizing filter - Wikipedia, the free encyclopedia
The Wikipedia link is good, as far as it goes, but doesn't explain the real difference between a "linear polarizer" and a "circular polarizer".
A linear polarizer does not polarize the light (making the name incorrect, grammatically). It does not alter the light. It merely selects light of one particular polarized orientation. It somewhat analogous to a doorman who only lets short people into a club. The door man doesn't shorten tall people; he just sends them elsewhere.
A true circular polarizer, not the camera accessory that borrows the name, actually alters the polarization orientation of the light. It rotates the orientation based on the color of the light.
Film and digital sensors don't react differently to light of different orientations; they could care less, but many portions of the optical system in modern camera pipe a portion of the light from the image off to other sensors for metering and autofocus. The method used is almost always one that reflects light of one orientation and passes light of another. They can become blind or see an incorrect proportion of the light and thus fail when light is strongly polarized, as it is when a linear polarizer is used over the lens.
The cure is to use a combination attachment that is called, in photographic jargon, a circular polarizer. These devices have a conventional linear polarizer as their first element, after the front cover glass, and a true circular polarizer as the second, followed by another cover glass. You now have a package that selects light of one orientation, to get the desired photographic effect, and then scrambles the orientation to keep the light exiting the attachment affecting the performance of any metering, AF, or VF system.
These combination attachments, the so called circular polarizers, vary in quality a great deal. They are laminated packages that must be assembled with their outer surfaces perfectly plano-parallel and the two elements must be very color neutral, a rather difficult achievement for the true circular polarizing element. Cheap attachments are often not plano-parallel, reducing sharpeness, and not particularily neutral in color.