There are similar multiple circling actions in my kug fu forms. However we were taught to practice them differently, primarily moving the rear arm while keeping the front hand more fixed (also, the grip is with both hands palm down, instead of one up and one down).
In my experience, the multiple circles happens sometimes as a way to attempt to control the opponent's staff until you can make a decisive strike.
For example, your opponent thrusts in at you, and you respond by deflecting and circling out of the way. At the bottom of the circle, you feel him prepare to swing back up at your head, so you continue the circle deflection down again. This could go on until you feel him withdraw, or he loses control opening him up for an attack.
This isn't a great description, it's something you sort of have to feel. It's like sticky hand sparring with a staff, where you use contact with the opponents staff to read their intention and follow them into an appropriate action.