The word circumcision comes from the Latin words meaning “to cut around”. The practice itself was instituted by revelation as a sign or token that one was of the covenant seed of Abraham.
I won't explain the actual practice (phew) but this practice is quite important to note, simply because circumcision was ordained as a token of the Lord’s covenant with Abraham.
It was the physical token of the covenant between them and God.
And I will establish my covenant between me and thee and thy seed after thee in their generations for an everlasting covenant, to be a God unto thee, and to thy seed after thee.
And I will give unto thee, and to thy seed after thee, the land wherein thou art a stranger, all the land of Canaan, for an everlasting possession; and I will be their God.
And God said unto Abraham, Thou shalt keep my covenant therefore, thou, and thy seed after thee in their generations.
This is my covenant, which ye shall keep, between me and you and thy seed after thee; Every man child among you shall be circumcised.
And ye shall circumcise the flesh of your foreskin; and it shall be a token of the covenant betwixt me and you.
And he that is eight days old shall be circumcised among you, every man child in your generations, he that is born in the house, or bought with money of any stranger, which is not of thy seed.
He that is born in thy house, and he that is bought with thy money, must needs be circumcised: and my covenant shall be in your flesh for an everlasting covenant.
And the uncircumcised man child whose flesh of his foreskin is not circumcised, that soul shall be cut off from his people; he hath broken my covenant.
The Joseph Smith translation of this passage helps us better understand why the Lord chose this particular token:
And it came to pass, that Abram fell on his face, and called upon the name of the Lord.
And God talked with him, saying, My people have gone astray from my precepts, and have not kept mine ordinances, which I gave unto their fathers;
And they have not observed mine anointing, and the burial, or baptism wherewith I commanded them;
But have turned from the commandment, and taken unto themselves the washing of children, and the blood of sprinkling;
And have said that the blood of the righteous Abel was shed for sins; and have not known wherein they are accountable before me. . . .
And I will establish a covenant of circumcision with thee, and it shall be my covenant between me and thee, and thy seed after thee, in their generations; that thou mayest know for ever that children are not accountable before me until they are eight years old.”
(JST, Genesis 17:3–7, 11)
Much additional information is given in this account. The Lord actually explained why He was establishing this particular token of the covenant before He instituted its practice. Did you pick it up? Among several ordinances, I am sure, the people weren't baptising correctly. It was an ordinance that they were observing incorrectly. That is, the people had left correct prinicples, forsaking correct ordinances, starting to misunderstand the relationship between the accountability of their children and the atonement of Jesus Christ. No good.
The people were washing their children and sprinkling blood in remembrance of Abel’s blood, which they taught was shed for sins. No good at all.
It was because of this apostasy that circumcision was instituted. Its practice became a physical token, a covenant token, for all Abraham's seed to remember that children were not accountable until they were eight years old.
"Other scriptures make it clear that it was not the act itself but rather what it stood for that gave
circumcision its greatest significance. In many places the Lord speaks of true circumcision as being the circumcision of the heart. The heart that is “circumcised” is one that loves God and is obedient to the Spirit. The “uncircumcised in heart” are wicked, proud, and rebellious [a].
"Though a person may have had the token of circumcision in the flesh, unless he was righteous the covenant was invalidated and the circumcision became profitless. Thus, circumcision was only a sign or token of what needed to happen to the inward man. If the inward change had not taken place, then circumcision was virtually meaningless [b]." 
[a] See Ezekiel 44:7; see also Deuteronomy 10:16; 30:6; Jeremiah 4:4; Ezekiel 44:7; Acts 7:51; Romans 2:25–29; Colossians 2:11
[b] See Jeremiah 9:25–26; Romans 2:25–29; 1 Corinthians 7:19; Galatians 5:1–6; 6:12–15; Philippians 3:3–4
Hmm .. what kind of picture goes with this post?
Oh, calm down peoples!
 5-17 in Old Testament student manual, bold added