What is the difference between circulated and uncirculated notes?

Uncirculated notes are in near mint condition, they are perfectly clean, the ink is bright and the notes lay perfectly flat. Uncirculated notes have no bends, creases or folds. When stacked, the edges of uncirculated notes meet perfectly in such a way that the appearance is that of a single, solid, absolutely clean edge. View examples of uncirculated notes.

Circulated notes sound like what they are, they have been handled and have imperfections that keep them from being considered uncirculated. See pictures of circulated notes.