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What is circulation?

Circulation is the movement of substances like nutrients and gases within blood vessels and cavities throughout the organism.

Do all animals have a circulatory system?

Not all animals have circulatory system.

Poriferans, cnidarians, platyhelminthes and nematodes (in these there are the pseudocoelom fluid but no vessels) are avascular animals. Echinoderms do not have true circulatory system either.

What is the alternative means for transport of substances in animals without circulatory system? Why is blood important for larger animals?

In animals that do not present circulatory system the transport of substances occurs by cell to cell diffusion.

The blood is a fundamental means of substance transport for larger animals since in these animals there are tissues distant from each other and from the environment thus making diffusion impossible.