Why do the indy formula and Nascar cars run in circles?

I guess for the same reason Horse Racing tracks are almost always an oval.

Just different!!  Coupled with an American need for speed and less for the skill needed on a track that has varying shape and different levels.

Because the track would have to be too large if they ran the whole thing in a straight line and spectaors wouldn't get to see enough of the race to make it worth buying tickets.

It's a different style of racing. Despite what some may say, Oval racing requires a lot of skill. Driving a car at 200+ mph and doing it safely is really hard to do. Get yourself a game and try it you'll see the difficulty level.

As for why? Oval tracks dont require as much space as a conventional race track. They can be built quicker and cheaper. They also are very specator friendly. As a spectator you can see the whole track from one seat. Also Americans tend to be obsessed with power. No better way of showing that in racing than with oval racing.

Each to their own on what you prefer, but NASCAR and indycar take some serious skill to do well. Both disciplines (oval and street racing) require a different skill set. Both are equally as valid and entertaining.

However if you want the true form of skill when it comes to car control, in my opinion nothing beats rallying

That would require a different kind of driver. NASCAR drivers are fairly stupid. F1 drivers are highly skilled by comparison..