I guess the meaning is slightly different to everyone, but generally it means you're attractive and you have a wonderful personality. So in some ways, it's a better compliment than just being called beautiful.
Pay attention to the context it's being used in, especially when a guy says it. If a guy tells another guy, "She's kind of cute," or "She's really cute!" then that pretty universally means he's attracted to the girl. If a guy says, "You're cute" direct to your face, then pay attention to how he says it. It could range from a random observation to mild flirting.
The difference between saying "cute" and saying "beautiful", is that "beautiful" sounds really formal and it sounds like you're talking about a painting or something. Not that I would never use it but it sounds a little too objective and detached. Calling someone "hot" is less objective but similarly detached. You call someone "hot" when you find them attractive but don't think they're the kind of person you'd ever get to know very well. On the other hand, "cute" is more of a subjective term, a little bit less than saying you like someone but closer because it's more personal in what it means to you.
No one is ever going to question what you mean when you call someone "cute", which is precisely why people use it. It pretty much means that the person has certain qualities you find attractive, and those qualities can include both personality traits and physical beauty. It's not exclusive to either, and the interpretation is whatever the speaker wants it to be.
I consider cute to be on par with beautiful. Now that I think about it it's hard to describe the difference. I suppose cute is more of a youthful sort of babyface attractive. Whereas straight up beautiful is a more mature looking sort of defined features attractive. You don't have to be young to be cute and you don't have to be older to be beautiful though...
Sorry if that is confusing it is hard to describe...
if I call someone cute its in a childish way like aww your so cute, an I don't want to hurt your feeling way, or I'm too shy to call them hot lol
"Cute" means "endearing", and that it is usually used in the case of personality though, naturally, it can be used for facial structure too. When used in that sense, cute is just as nice as beautiful (in my opinion, anyways).
I prefer cute myself because generally it's directed at my personality. Any stranger can call me beautiful and mean it, but it takes someone who really knows me to find me "cute" since I can have a rather cold attitude with others. It depends on the person I guess. I get massive butterflies when my special someone says "you're so cute." They call me beautiful, sexy, and lovely too though so .. a balance is nice.