The message "all circuits are busy" on a phone means that all available connections in that phone network are being used. A given network has a limited number of switches used to place calls, and when this number is exceeded, additional calls can only go through once others complete.
Typically, all circuits are only full during emergencies when an abnormally large number of people in the same area try to make calls simultaneously. Phone companies try to maintain more circuits than registered phones to prevent circuit traffic, however sometimes they still become overloaded. When receiving this message when making a call, wait briefly, then retry the call.