This tickled my brain in a nice way.

I'm probably butchering this, but in my mind it is something like:

1. From the squirrels frame of reference and local coordinate system, the man has remained "in front" of the squirrel. The squirrel is orienting and rotating in sync with the man and therefore has not observed that the man has "gone round" it.

2. From our perspective (and on reflection from the man), the man has circled the squirrel in the global coordinate system of the scene.

As the reader we assume that our perspective is the authoritative one, but I am sure the squirrel disagrees.