One thing to realize is that roundabouts and traffic circles (also called diverters and rotaries) are not the same thing.

The roundabout was invented in England in 1966 and is used all over Europe, Asia and Australia to great effect. For many Americans, it epitomizes European driving. The traffic circle is much older, dating to late 19th century USA (although some claim it was a French invention) and is most commonly found in North America, being a widely maligned and hated mechanism.

So what are the differences? There are 2 primary differences. A traffic circle is designed to allow traffic through as fast as possible. Meaning that approaches and exits are kept as straight lines. This means that traffic through them is very fast and very dangerous. Whereas with a roundabout, curves are expressly added at the entrance points, to ensure that traffic slows down. This promotes a much saner, and safer, progression through the intersection. Also, a traffic circle has no special provisions to force right of way. Sometimes traffic lights are added at entry points, which just frustrates drivers (although to be honest, some roundabouts employ these as well). Sometimes one road will always have the right of way, while others will have stop signs, which just engenders confusion, as well as meaning that cars on side roads may have to wait for unreasonable lengths of time before being able to progress through the intersection. And all too often, no signage at all is employed, meaning that the standard rule of "yield to the right" takes precedence. In countries where driving is on the right, this is disastrous, as it means traffic entering the circle has precedence over traffic already in the circle. A quick pencil and paper analysis will show that this ensures gridlock if the roads are at all busy.

In a roundabout, cars in the circle always have right of way over cars entering.

The traffic circle was originally called by the unwieldy term gyratory circle until the 1920's, when an American named Logan Pearsall Smith, who was on the BBC Advisory Committee on Spoken English, suggested the replacement "roundabout". The name change caught on pretty much everywhere that English is spoken, except North America, which preferred some of the terms mentioned above. They were popular on both sides of the Atlantic, with great concentrations of them in New England, until the 1950's, when the ever-increasing volumes of traffic made them both very cumbersome and dangerous. American engineers began the process of removing them, preferring traffic lights and four way stops instead.

In Europe, rather than remove them, civil engineers sought to improve them. Cumulative suggestions and improvements were applied to existing roundabouts until in 1966, the Transport Research Laboratory in Berkshire, England came up with a concise set of guidelines for roundabouts in England. Among the revised standards were:
    - Yield sign for entering vehicles.
    - Vehicles in the roundabout have priority over the entering vehicle.
    - Use deflection to maintain low speed operation through roundabout.
    - No parking is allowed on the circulating roadway.
    - No pedestrian activities take place on the central island.
    - No at-grade carriageways through the central island.
    - Splitter island for entering roadways.

While not all roundabouts follow these standards to the letter (specifically, the last one suffers from arbitrary use), they were in theory adopted by the British government for all roundabouts in the country. Other countries around the world started adopting these same (or similar) guides, and modifying their roundabouts to adhere to them.

Numerous studies have shown that the newer style allows for higher traffic volumes more efficiently and safely than even the traffic light, and so they are starting to be re-adopted in North America. Progress is slow, especially in places like New England, where the ubiquitous old-style traffic circles garnered the most enemies, but it is happening. Colorado seems to be taking the lead in installing the most, and best, roundabouts in recent years. Colorado also employs impressive signage, even better than European signs, indicating well in advance which lanes cars should be in to leave at the proper exit. This is not much of an issue for drivers who are familiar with the way a roundabout works, but for many American drivers (who are not), it alleviates the biggest source of frustration and confusion relating to the roundabouts.

The biggest flaw of roundabouts is that they are rather unfriendly to pedestrians and cyclists, who often have a long way to go around them, and may have to contend with unreasonably fast traffic leaving the intersection.