Its a round thing that has a bunch of holes where you put this little handheld blade (it comes with it) in whatever hole for the size circle you need. The plate where the holes are spins, so when you move your hand with the tool, you just go in a circle and it cuts the hole! It's like $15 or so regular priced, so you can use a coupon or see if it's on sale and get it for a pretty good price.
I have several sizes of round, square, and heart shaped punches. But before I got any of these I just traced a circle and cut it out (very carefully) with scissors.
I do like the punches much better than free hand though!
Like Judy above said, I used to go to my kitchen and find various round shape bowls. I'd take them to my scraproom and see which one fit my purpose. Trace & cut with regular scissors and then you have a perfect circle.