My question concerns the highlighted part posted below, from Wikipedia article. (Link to the revision at the time of this post.)
I'd say I can't detect the curvature of the unit circle if I go along the curved path within ${\mathbb R}^2$. The induced metric only measures the one-dimensional length and forgets about the plane.
So why would the induced metric not be flat?

The Wikipedia page you have cited is wrong about metrics on the circle. The Wikipedia page on Curvature correctly points out that 1-dimensional curves do not have an intrinsic curvature.