I am experimenting with circular lists and have written a flawed graph viewer. So when I try to draw 2 different graphs
(graph-viewer:graph '#1=(1 2 3 #1#) "a")
(graph-viewer:graph #1='(1 2 3 #1#) "b")
I get who different pictures with the latter version having a quote symbol included in the graph.
You need to think how the reader does its job.
When it sees #1=, it knows to store whatever comes next and re-use it on #1# - think about it as a "binding" for the "variable 1".
When it sees '<blah>, it reads it as (quote <blah>).
Thus, when it sees '#1=(1 2 3 #1#), it reads it as
(quote (1 2 3 *))
^ |
| |
+------+
(quote is outside of "binding of 1")
while #1='(1 2 3 #1#) is read as
(quote (1 2 3 *))
^ |
| |
+-------------+
(quote is inside the "binding of 1").
The "arrow" in the pics above is the reference, i.e., * points along the arrow.