optics - What is the "Circle of Confusion?"

I know that when I want to calculate Depth of Field by hand one of the variable elements in that equation is the Circle of Confusion. In layman's terms, what is the "Circle of Confusion," how do I calculate it, and is there any other ways that it applies to my photography aside from calculating DoF?

Answer

This is often a source of confusion which most people get backwards, so understanding this is delicate:

When a light entering a lens is not in focus, a point on the subject is focused into a circle on the image plane (sensor/film). This circle IS the circle of confusion. The more out of focus a point is, the larger the circle of confusion becomes. This depends on focus distance, subject distance and aperture. It does not depend on the capture device resolution or viewing conditions.

The circle of confusion used in DOF calculations is the maximum allowable circle of confusion which is considered in acceptable focus. This is dictated by the size of the display medium and by viewing distance because of the way human vision resolves details.

Historically, most DOF tables use a standard COC which corresponds to unaided viewing of an 8"x10" at 14" away for someone with 20/20 vision, although I am sure other magic numbers are used sometimes.