CSS 3 Shape: “Inverse Circle” or “Cut Out Circle”

Update: CSS3 Radial Background Gradient Option

(For those browsers supporting it–tested in FF and Chrome–IE10, Safari should work too).

One “problem” with my original answer is those situations where one does not have a solid background that they are working against. This update creates the same effect allowing for a transparent “gap” between the circle and it’s inverse cutout.

See example fiddle.

CSS

.inversePair {
    border: 1px solid black;
    display: inline-block;    
    position: relative;    
    height: 100px;
    text-align: center;
    line-height: 100px;
    vertical-align: middle;
}

#a {
    width: 100px;
    border-radius: 50px;
    background: grey;
    z-index: 1;
}

#b {
    width: 200px;
    /* need to play with margin/padding adjustment
       based on your desired "gap" */
    padding-left: 30px;
    margin-left: -30px;
    /* real borders */
    border-left: none;
    -webkit-border-top-right-radius: 20px;
    -webkit-border-bottom-right-radius: 20px;
    -moz-border-radius-topright: 20px;
    -moz-border-radius-bottomright: 20px;
    border-top-right-radius: 20px;
    border-bottom-right-radius: 20px;
    /* the inverse circle "cut" */
    background-image: -moz-radial-gradient(
        -23px 50%, /* the -23px left position varies by your "gap" */
        circle closest-corner, /* keep radius to half height */
        transparent 0, /* transparent at center */
        transparent 55px, /*transparent at edge of gap */
        black 56px, /* start circle "border" */
        grey 57px /* end circle border and begin color of rest of background */
    );
    background-image: -webkit-radial-gradient(-23px 50%, circle closest-corner, rgba(0, 0, 0, 0) 0, rgba(0, 0, 0, 0) 55px, black 56px, grey 57px);
    background-image: -ms-radial-gradient(-23px 50%, circle closest-corner, rgba(0, 0, 0, 0) 0, rgba(0, 0, 0, 0) 55px, black 56px, grey 57px);
    background-image: -o-radial-gradient(-23px 50%, circle closest-corner, rgba(0, 0, 0, 0) 0, rgba(0, 0, 0, 0) 55px, black 56px, grey 57px);
    background-image: radial-gradient(-23px 50%, circle closest-corner, rgba(0, 0, 0, 0) 0, rgba(0, 0, 0, 0) 55px, black 56px, grey 57px);
}

Original Answer

Took more effort than I expected to get the z-indexing to work (this seems to ignore the negative z-index), however, this gives a nice clean look (tested in IE9, FF, Chrome):

HTML

<div id="a" class="inversePair">A</div>
<div id="b" class="inversePair">B</div>

CSS

.inversePair {
    border: 1px solid black;
    background: grey;
    display: inline-block;    
    position: relative;    
    height: 100px;
    text-align: center;
    line-height: 100px;
    vertical-align: middle;
}

#a {
    width: 100px;
    border-radius: 50px;
}

#a:before {
    content:' ';
    left: -6px;
    top: -6px;
    position: absolute;
    z-index: -1;
    width: 112px; /* 5px gap */
    height: 112px;
    border-radius: 56px;
    background-color: white;
} 

#b {
    width: 200px;
    z-index: -2;
    padding-left: 50px;
    margin-left: -55px;
    overflow: hidden;
    -webkit-border-top-right-radius: 20px;
    -webkit-border-bottom-right-radius: 20px;
    -moz-border-radius-topright: 20px;
    -moz-border-radius-bottomright: 20px;
    border-top-right-radius: 20px;
    border-bottom-right-radius: 20px;
}

#b:before {
    content:' ';
    left: -58px;
    top: -7px;
    position: absolute;
    width: 114px; /* 5px gap, 1px border */
    height: 114px;
    border-radius: 57px;
    background-color: black;
}