I'm not sure if top-down perspective refers only to games such as Zelda: A Link to the Past, Pokemon, Mother 3, etc. BUT I'd say that it depends on how your squares look like. A circle should be inscribed on a square (
fig 2), touching the midpoints of every edge. If it would be a regular square, then it would be a 1:1, if it would be squashed or slanted, then the circle should follow that.