When a player grabs possession, he has a few decisions to make. One of them is if there is a good pass available. The first step is to gather all the players in a possible receiving position. The mechanics of this kind of game means that the player is always moving when he has possession and must pass in the general direction he is moving. It's only fair the AI does the same.
So the small circle represents his short passing range and the large circle represents his long pass range. Any team mates within these circles will be considered as a possible passing target. Of course, if the player is under pressure and no passes are available, he'll have the option of hoofing the ball upfield blindly. So for Man Utd, the circles are essentially redundant.
I've zoomed way out so you can see what's going on: