The circumflex in French is the little Chinese hat on the top of certain French vowels. The most common reason for its presence is that it usually represents a letter that has been dropped over the centuries. Usually this is the letter 's'. Knowing this will help you figure out quite a number of French words when you read them.
When the Normans from Normandy, Northern France invaded Blighty (England) back in 1066 under the command of Big Bill (a.k.a William the Conqueror ... or Guillaume to his mother and friends ...) they brought the French language with them. And for the next 400 years the language of the English aristocracy (i.e. the Normans) was Norman French. They brought with them many, many thousands of words which then blended into the Anglo-Saxon language of the commmoners (English).
The Old French word for hospital was hospital. Forest was forest... as it remains to this day in English. These words were imported (free of charge) from French.
But back in the motherland, la Belle France, the French themselves started slanging a bit in their day to day conversation.
Over time, they dropped the letter 's' in many words so that hospital became hopital, forest became foret and host became hote in spoken French back in France.
For a long while the monks who did all the writing and recording in those dim dark days, continued to include the 's' while spelling. However they eventually succumbed to the power of spoken speech, and dropped the silent letters. They decided however to 'pay tribute' to those lost letters and put a circumflex over the preceding vowel to indicate that there had previously been an 's' (or other letter).
So the French hospital became hôpital with a circumflex ^ over the o
Likwise many other words followed suit:
forest became forêt.
host became hôte.
hostesse became hôtesse.
haste became hâte.
coast became côte.
fenester (church window) became fenêtre = window.
paste (or pastry) became pâte and pâté.
beast became bête.
feast became fête.
master became maître.
tempest became tempête.
arrest (stop) became arrêter.
conquest became conquête.
inquest became enquête.
to cost became coûter.
crust became croûte.
hostel became hôtel.
isle became île.
interest became intérêt.
plaster became plâtre.
quest became quête.
vestments (clothes) became vêtements.
and so on.
Sometimes a letter other than 's' was dropped and replaced by a circumflex in French words such as:
aage (age) became âge where the preceding a was dropped.
baailler (to yawn or gape) became bâiller where the preceding a was dropped.
baaillon (gag) became bâillon where the preceding a was dropped.
creu (from the verb croître) became crû where the preceding e was dropped. Crû is different to cru which is from the verb croire (to think, believe).
deu (from the verb devoir) became dû where the preceding e was dropped.
meur (wall) became mûr where the preceding e was dropped.
seur (sure as in safe, sound, reliable) became sûr where the e was dropped.
Over the centuries the Norman French of England blended into English, and retained the 's' in many of the imported French words while the French in France developed down a different track to become ... well ... French as in the modern French language in its various forms.
So you can often figure out the meaning of a French word with a circumflex by knowing that the circumflex indicates a missing letter after the vowel ... usually the letter 's'.
So how do you type those little Chinese hats on an English keyboard? By depressing the ALT-key while typing these numbers on the numeric keypad:
 ALT-0194
Ê ALT-0202
Î ALT-0206
Ô ALT-0212
Û ALT-0219
â ALT-131
ê ALT-136
î ALT-140
ô ALT-147
û ALT-150
For a full list of ALT-NUMPAD combinations, click here.