I have the following matrix: $\begin{bmatrix}8 \ 7 \ 7\\ 0 \ 2 \ \frac14\\ 0 \ 3 \ 1 \end{bmatrix}$
So my Gershgorin Circles are
$D(8,14)$
$D(2,0.25)$
$D(1,3)$
The Eigenvalues however are: $8,2.5,0.5$. Therefor the second eigenvalue is outside its gershgorin circle.
What am I missing?
According to the Gershgorin theorem the eigenvlues are within the union of Gershgorin disks.
Only if the disks are disjoint, we have each eignvalue located in its own disk.
In your problem the disks are not disjoint.
Thus there is no conflict here.