I like to think of this as an accurate diagram for the individual's knowledge. The inner circle is his/her own personal knowledge, and the outer circle is the shared knowledge that that person share's with others. Bits of the personal knowledge are all shared with many different people, which is why it is entirely inside of the large circle. If the shared knowledge was only between two individuals, it would most likely be a venn diagram instead, since no two people can know exactly the same things.
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