This is a prophesy to Avraham as to what will happen to his descendants and the relationship that they will have with Hashem. This is based on verse 12 and answers the question posed by Avraham in verse 3 about not having children and in verse 8 במה אדע. As a result, it does not refer to the Bris Milah, which is a different matter.
The Art Scroll chumash summarizes the meforshim that this was a promise by Hashem to Avraham, not a treaty between two parties.
Lech Lecha 15:7
The furnace and fire symbolized that eh Divine Presence was there to
seal the covenant, and the smoking furnace also symbolized Gehinnom, ,
into which the Four Monarchies would descend (Rashi). Alternatively,
they symbolized the intense darkness and the fire that would be
present at the Revelation at Sinai (Exodus
19:18)
(Moreh Nevuchim)
Rav Hirsch says that the fire and the furnace symbolized the purification and recombining that would affect his descendants. This is a prophesy of the three fates עבדות, גרות and ענוי that the Jewish people will suffer before being redeemed.
"And then when the sun had gone down, and complete darkness had set,
lo, it was a smoking furnace and a torch of fire - it had been a
refining and an enlightening - which had temporarily kept these pieces
apart" (עבר not עובר) - the purification was completed, the
enlightening had worked, the broken parts were joined again.
דן אנוכי not אדון I will judge, but: I judge it now. The nation that I
have appointed for a refining glowing furnace, a melting pot for your
descendatns receives herewith the declaration of the fate that will
overtake it when its mission ends, in the punishment it so richly
deserves.
