What does the spinning circle next to the network indicators on iOS mean?
The spinning circle icon is simply a means of indicating that some network activity is taking place, i.e. loading new data in Facebook or Tumblr. It could even be background data access like updating apps from the store or if you have background refresh enabled for some or all apps.

It has nothing to do with which network is being used — for that, check the cellular/Wi-Fi indicator. If the Wi-Fi icon is there, then it's the Wi-Fi network being used.

It's also worth noting that apps can turn on and off the indicator at will, so it's not a 100% reliable indicator that data is actually being transferred. If coded poorly, an app could activate the indicator, but neglect to deactivate it in certain circumstances.