This guide will take you through setting up Google+'s circles with an emphasis on how they work from a privacy perspective, how to control what others can see about you on your profile, your options for selectively sharing posts with others, and some miscellaneous settings you'll want to tweak — like only allowing friends to start Huddles with you.
A note on pseudonymity: Google has taken a strong and, I think, awfully mistaken stance on not allowing people to use Google+ with a pseudonym. While this is definitely a privacy issue, it falls outside of this post's purpose of explaining how to use Google+'s privacy settings. Kee Hinckley, a Consulting CTO for Somewhere.com and Lead Architect at Zinc.tv, has written a compelling and thorough poston the subject, and hopefully Google is listening and will rectify this issue.