Hmm, in my terms, I call the guys that I'm interested in 'cute'. They're all taller (well, one's the same height but it doesn't matter) than me, which is kinda contradicting what the other girls said below, but it's just my choice of words. I don't like the word sexy, I use hot to describe super good looking actors/singers and handsome is saved for special occasions, say the guy is all dressed up in a tux. Either way, it's a compliment of the girl thinking that you're attractive which leads into flirting and her liking you. :)
1.) cute- when something is small, they are cute [puppies, kittens, small children, etc.]
2.) cute- when someone is attractive, and a prospective boyfriend, although I usually use the term "attractive" for someone that interests me immediately, and "cute" for someone that could prospectively be an interest in the future.
ummm well they are either flirting or putting you into the friend category. Its going to depend on the context of them saying it. If they put their hand on your arm and say "you are really cute" they want your sh*t. If they say, "oh you are so cute!" and stand a foot away from you then its probably the friend zone.