The Circle of Lassitude is a metaphor for people content to linger on the fringes of fandom, as local club members or sometime con goers, without fully plunging into the microcosm. In some cases, they don't even know about it. It is, unfortunately, now possible to attend cons for years without ever really connecting with the international network of actifans.
The term also refers to formerly active fans in a state of semi-gafia — basically anyone who doesn't regularly interact with fandom outside a local circle and who doesn't get involved in fannish projects such as conrunning, regular con going, fanzine publishing or online activity.
The phrase comes from The Enchanted Duplicator. In Chapter 3, before climbing the Mountains of Inertia, Jophan finds a brilliantly lit, circular cave full of people talking, laughing and playing games. They hospitably invite him in, give him a drink, and a young member asks where he is bound for.
"But this is Fandom!" exclaimed the youth indignantly.
"Well, not exactly," said an older man who had overheard, "but it is good enough for us. Actually this is only the Circle of Lassitude. We've heard of Fandom, of course, but it's such a lot of trouble getting over those mountains that we don't know much about it. We have all we want here, you see, so we're quite happy. If you want to know something about it, though, I could introduce you to those three old men in the corner. They lived in Fandom for a time long ago, until they came back for a visit to the capital of Mundane. They were never able to tear themselves completely away or face another journey over the mountains. It's easier to come back, you know. By the way, my name is Leth, Robert George Leth. They call me Leth R. G. for short."