Why are there many strange little circles on the RMB watermark?

This is not a watermark, it is printed on the surface of paper, called Omron ring.

Omron ring, also known as round constellation anti-counterfeiting technology, is a kind of currency anti-counterfeiting technology. Anti-counterfeiting technology of round constellation EURion constellation is usually called anti-copy circle. This anti-counterfeiting technology consists of five small circles arranged in the form of Orion constellation to form a complete constellation pattern. In the color copier now produced, the recognition of this pattern has been preset. Once the constellation pattern is found, the copier will automatically output it, resulting in serious color distortion. Since this technology was invented by Omron Corporation of Japan, these small circles are also called Omron rings, and obtained the US patent 5,845,008. The People's Bank of China tried this technology on the 1999 RMB 1 yuan banknotes issued in 2004, and the anti-copying effect was good. In the updated version in 2005, this technology was completely adopted.