This is how I imagine it working:
1. Active Pokemon are the ones currently battling within the battlefield.
2. Waiting Pokemon are neither in the battlefield or next to each other, they can't do anything until rotated to the active/swappable spots.
3. Swappable Pokemon, being outside the battlefield and close to each other, can change places so they're now on the other rotational circle (that way you're not stuck with certain combinations).
4a. And if one Pokemon gets knocked out that Rotational Circle would then only have two spot: Active & Swappable (unless the trainer revives a Pokemon in which case the revived Pokemon is placed in the Waiting spot).
4b. If a Rotational Circle only has one Pokemon in it and the trainer revives one Pokemon, it's placed in the Swappable spot.
5a. If a Rotational Circle only has one Pokemon while the other Rotational Circle has three the Swappable Pokemon can go into the Swappble spot of the other Rotational Circle letting both circles have two Pokemon (however neither circle can have 3 Pokemon again unless the trainer )
5b. If a Rotational Circle only has one Pokemon while the other Rotational Circle has two the Swappable Pokemon can freely go back and forth between the Swappable spots on both Rotational Circle.
NOTE: This isn't wishlisting, I don't expect this to ever be a real thing. I just thought of it and couldn't help but expand on it to make it sound at least plausible, but as you read it's a bit complicated to every be considered.