Any time you favorite an item or shop, the people in your circle see your activity. They don't see when you list a new item.
It helps you when buyers favorite your items or shop and the people in THEIR circle see it.
In a sense, when you become part of a circle you're helping to promote other shops with the hopes that someone else will do the same for you.
I have two shops and each is in my circle. When one shop favorites an item from the other, the shops in my circle can see it. I'm promoting my own items through my circles. Not everyone has two shops though.