"Circle-jerk" is a metaphor, from the original imagery of a group of males sitting in a circle, all masturbating the person to their right. This physical activity provides a risen status and a pleasurable outcome for the entire group of people that participates. While each person can count on a reward for themselves (thus the popularity of participation), their direct actions are technically purely altruistic.
In the context of Allakhazam, a CJ or circle-jerk is a thread in which every poster rates up every other poster in the thread, permanently increasing their average karma score slightly without having done anything to deserve it (apart, possibly, from the original poster).
Circle-jerks are technically against the rules, but the Admins are known to look the other way, or even participate, as long as they are used in strict moderation They are preferably kept for momentous celebrations like graduations, weddings, birth of children, your first character to hit the top level in a MMORPG, and post-count ding threads that get you a new star under your name.
CJ Etiquette includes: Mandatory rate-up for the original poster who is celebrating a major milestone; One rate up for each individual poster. If an individual poster posts more than once in the thread no more rate-ups for them are required; Rate poster up regardless of whether that post is already marked as Excellent; Rate poster up regardless of what they have written, no matter how cursory or boring.