Figma wizards: what's the best way to be able to have the blue circle be 8px offset from the right edge on both X and Y axes? Easy to do for the red circle from the left edge. https://i.imgur.com/IxrFHbv.png

So when I hit Auto Layout, it collapses the parent frame. Is the idea to use many layers of transparent frames for the layout on a single background frame? https://i.imgur.com/iqa8HMW.png

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The group can be made into a component so that you can plug into your actual design pages. This is the typical workflow that I've done and it maps pretty well with my frontend development experience (defining components atomically and importing it)

If you want to keep the parent frame, then you can create a group of the objects - an auto layout can be created on a group! 
So you can
1. Have a layout 
2. Create a group of objects (in this case the two circles) 
3. Define how the width will be calculated (this pretty much follows the ideas of Flexbox)