The characters in Water for Elephants are members of a circus: specifically, The Benzini Brothers' Most Spectacular Show on Earth. So what does that mean?
Most likely, when we hear the word "circus," we react in the same way Jacob's peers at the old folks' home do. They remember the circuses they've been to with excitement and nostalgia, lingering over the sights, sounds, and tastes of the experience.
"My father used to take us down to the tracks to watch them unload. Gosh, that was something to see. And then the parade! And the smell of peanuts roasting – "
"And Cracker Jack!"
"And candy apples, and ice cream, and lemonade!"
"And the sawdust! It would get in your nose!" (1.36-39)
The characters' excitement here, conveyed through all the exclamation marks, is something most of us can relate to. In this conversation, the characters build up a single, shared memory, a cumulative sense of what attending the circus was like. Attending the circus makes people think of being young and experiencing something special. It's exciting, and it's an escape.
But just how special is the circus to which Jacob belonged? It looks fine from far away, but when you get up close, you start to see the flaws. There are no actual Benzinis, just Uncle Al. Until Rosie's arrival, the circus doesn't even have elephants, the hallmark of any great traveling show (and a showpiece at Ringling Brothers). And the circus takes advantage of the audience, serving lemonade they've made from animal trough water, advertising acts that don't actually appear, and even using a funeral procession to drum up publicity.
Despite his many faults, August is one of the few people able to see the circus for what it is. Early on, he clarifies this for Jacob, explaining that the circus they're traveling with is far from the best:
Tell me, do you honestly think this is the most spectacular show on earth? […] No. It's nowhere near. It's probably not even the fiftieth most spectacular show on earth. […]
It's illusion, Jacob, and there's nothing wrong with that. It's what people want from us. It's what they expect. (7.200, 204)
The circus isn't actually "spectacular." It's a spectacle, and the people watching it want to believe it's spectacular. They're willing participants in the illusion.
There's another illusion going on here: the Benzini Brothers circus never actually existed. Many of the other circuses mentioned in the book, like Ringling Brothers, are real. At the end of the book, Charlie treats the Benzini animal catastrophe as every bit as real as the true-life catastrophes of the Hartford Fire (24.40) and the Hagenbeck-Wallace Circus Wreck (24.40). But the Benzini event isn't real (for us readers). So the Benzini circus is an "illusion" created to please its audience, but it's also an illusion created by Gruen to please her readers.
Bottom line: the circus reminds us that things aren't always as they seem and that we shouldn't be fooled by spectacle.
The Big Top is the most exciting part of the circus. There are other tents and areas where the performers get ready, where the audience can buy snacks, where those willing to pay the price can take a look at the "freaks," and where kids can visit the animals (the menagerie), but the Big Top is where the best and brightest acts shine. It's where Marlena and her horses perform, and where Rosie joins the show once Jacob has figured out how to communicate with her.
The Big Top is also the center of "illusion" (7.204) in the book. It's where the tricks happen and where what the audience sees doesn't necessarily match what's going on behind the scenes.
This happens in the audience, too. Toward the end of the book, Jacob catches a man in the audience peeking up a woman's dress, getting an altogether different kind of show. Jacob stops him, but the event makes you wonder – how many other times has this happened? How many shows are being seen at the same time?
Whatever happens in the ring, whether it's Rosie running out unexpectedly or another catastrophe, the circus folk have to make it look like it's all part of the act. The show must go on, and it usually does, no matter what the cost.