I remember a version of this circle when being given advice about teaching a short class.
As an instructor, you need to find out where the edge of the colored area is for the student. If you try to teach inside the colored area, they already know it, and you are wasting his time. If you try teaching in the red and the student’s limit is in green, he won’t be able to understand and you are wasting his time.
The instructor needs to present material outside of the student’s circle of knowledge, but close enough that the student can grasp it and incorporate it into and expand his circle.