Situation
Situation refers to a set of conditions that are in place at a particular time and in a particular place:
If the situation had been different, our marriage might have succeeded.
I am particularly concerned about the situation in the south of the country where the rules of law and order appear to have broken down.
We also talk about an economic or financial situation:
The financial situation is dire - the company has failed to make a profit in each of the last four years.
situation comedies / situations vacant
Note also the compound nouns situation comedies (abbreviated to sitcoms) which describe amusing television drama series revolving around a set of characters in a family or organisation and situations vacant which refers to a column or page in a newspaper where jobs are advertised:
'The Office' is regarded as one of the most original sitcoms the BBC has produced so far this century.
If you just want a clerical job, look in the situations vacant column in the local newspaper.
A situation consists of a variety of or number of circumstances. In other words, a circumstance is one of the details of a situation.
Both circumstances and situation can be synonyms, but have different meanings depending on usage.
'Circumstances' (plural) is the way in which something took place: what were the circumstances of his death?
Under no circumstances means 'not at all'.
In the circumstances means 'as things have turned out like this' or 'as it happens': it's a pity it's pouring down, but in the circumstances it doesn't matter so much as there is plenty to do indoors.
'Circumstances' is also the state of your finances: he is in easy circumstances; they are in tight circumstances.
'Situation' is the state of affairs: we're in rather an awkward situation; this has put him in an embarrassing situation; in the teaching situation means 'when you are teaching'; we are in a no money situation, we have no money.