In the tree a knot is either the base of a side branch or a dormant bud. A knot (when the base of a side branch) is conical in shape (hence the roughly circular cross-section) with the inner tip at the point in stem diameter at which the plant's vascular cambium was located when the branch formed as a bud.
Because a knot's shape is conical, what shape does a cross-section of it have?
circular