Limit big smoke rings primarily around faculty (8)
I believe the answer is:
'faculty' is the definition.
'limit big smoke rings primarily' is the wordplay.
'limit' becomes 'city limit' (city limit is a kind of limit).
'big smoke rings' becomes 'capa' (I am not sure about this - if you are sure you should give a lot more credence to this answer).
'primarily' says to put letters next to each other.
'city' after 'capa' is 'CAPACITY'.
'around' is the link.
(Other definitions for capacity that I've seen before include "Ability to contain or accommadate" , "maximum size" , "Ability to perform or produce" , "Potential - role" , "The wherewithal" .)