I see "People Happiness Circles" and constructions like that as an expression of a confusion about what the practice of Holacracy is truly in service of: the purpose of the organization. If the purpose of the organization isn't coincidentally to "make people happy" (which it rarely is), but something else, then I would say it is trying to hijack the practice to process non-work-related tensions.
"People happiness" is similar to "profit" in a way: it is an important metric to track in order to be able to better express the purpose of the organization, but it is usually not a real organizational purpose in and by itself.
The tensions driving the creation of such circles are totally legit - outside of the container of the Organization. We at encode.org devised a different container for people to be able to process their personal and interpersonal tensions. We call this container or context ASSOCIATION. In Association space you are free to create all kinds of for-fun, fitness, self-development or what-have-you guilds, meetups, or whatever and anyone who wants to join is free to do so - or NOT. But there is no implicit expectation held to participate (thereby meddling in the private life of co-workers and infringing upon their freedom) - especially none of the kind that is unspoken and an artifact of the employer-employee shadow power game and class-division that often still persists even under Holacratic practice.
So there is the ORGANIZATION context / container to organize around the purpose and get the work done. Here Holacracy rules. Then there is the ASSOCIATION context / container to deal with our various needs as human beings. Holacracy is not the law of the land here. Instead we created an explicit Association Agreement, where we encode the values and norms that we want to be holding as this specific collective of Purpose Agents.
Thirdly, we at encode.org created a container to address the above-mentioned tensions that result from having to hang on to the outdated employer-employee relationship and associated legal constructs. We created a COMPANY container / context in which we all show up as partner/ members / co-investors, which circumvents the twisted, anachronistic employer-employee relationship and replaces it with working, earning, living peer-to-peer and for-purpose.
ORGANIZATION, ASSOCIATION and COMPANY make up what we call the FOR-PURPOSE ENTERPRISE.
This construct transcends and includes Holacracy and places it in a context that adheres to similar principles (see five markers of the new world of work ) and extends them to its surrounding structures in an attempt to solve for evolutionary tensions that the successful practice of Holacracy creates in the first place.
My answer got a little longer, but maybe it was helpful nevertheless.