A queue is a first-in, first-out (FIFO) collection where elements are inserted at the rear and deleted from the front. A circular queue solves the problem of overflow by making the queue circular, so the rear wraps around to the front when full. Operations on a circular queue include insertion, which adds elements to the rear until the queue is full and the rear wraps to the front, and deletion, which removes elements from the front. A priority queue processes elements according to priority, with higher priority elements removed before lower priority ones.