Hi. Whilst the help files do not specifically state 2D entities, the tool (and some others) are really designed for 2D work, i.e. working with lines, polygons etc. its the same with other tool like the perpendicular line tool, they are programmed to auto snap to 2D objects.
The difference to other 2D tools, is that they work by auto-detecting a 2D object to snap to, simply by clicking the line (no physical snap needed), with others like the 3 point circle, one physically snaps to 3 different points so it will work (sort of) on 3D objects.
you can see this by, draw a box, explode to ACIS, circle tangent won't work, - explode to TC Surface, Explode to polylines, Circle Tangent works.