Here's an example of how I use circumstance bonuses;
I have rules for ritual magic IMC, it takes a long time, and involves a skill check to perform correctly. There is also usually plenty of material components and aparatus involved.
I allow the caster to take longer than is required for their ritual - the longer you take over it the easier it gets to perform the ritual. This is represented as a competence bonus.
Additionally you can use more expensive (better) material components and aparatus. More money expended also makes the ritual easier. This I represent as a circumstance bonus.
Other examples;
Forging - a particularly good forge, high quality metal, excellent tools - all circumstance bonuses. A master forger advising you is a competence bonus, btw.
Essentially if the environment in which you are performing makes the task easier - circumstance bonus. Literally if the circumstances in which you find yourself help.
The reverse is true of penalties of course. Picking a lock while dangling from your toes on the end of a piece of string is likely to bring a circumstance penalty.