Comment by abrookewood

AFAIK all wafer ingots are cylinders, which means the wafers themselves are a circular cross section. So manufacturing is binpacking rectangles in to a circle. Plus different effects/defects in the chips based on the distance from the edge of the wafer.

So I believe its the opposite: why are they representing the larger square and implying lower yield off the wafer in space that doesnt practically exist?

Because the circle is the physical silicon. Any chips that fall outside the circle are only part of a full chip. They will be physically missing half the chip.

That's just the shape of the wafer. I don't know why the diagram continued the grid outside it.