The correct answer is B) flowing into drilled formations. The term "lost circulation" refers to situations where the drilling fluid being pumped down the drill string is lost by flowing into the surrounding drilled formations, rather than returning to the surface through the annulus. This occurs when the drilling fluid encounters a highly permeable or fractured formation that allows the fluid to flow into the formation instead of returning to the surface. This loss of drilling fluid can cause problems during the drilling process, as it can lead to a loss of well control and potentially dangerous situations. The other answer choices are incorrect because they do not accurately describe the definition of "lost circulation." An overflow in the mud pits (A) or overflowing the drill nipple (C) would not be considered lost circulation, and making drill string connections (D) is a separate process that is not directly related to the loss of drilling fluid.