What does I'm really flattered mean?

Anonymous
I like this guy a lot, and I've been talking to him sometimes, and the first time he talked he mentioned that he was "kinda seeing a girl" a couple of weeks later I told him I liked him.. I kinda went on a rant and stupidly placed can we be friends at the end (thinking that well he was kinda seeing someone, and I didn't wanna get rejected..Stupid I know) anyway he replied with "I don't know what to say, I'm really flattered :) sure we can be friends"

I'm pretty sure I have no chance with him.. but I catch him looking at me and you possibly could mistaken his actions and whatnot to be flirting.. But heck I have no clue! How could you tell if he were interested? (even though I'm pretty sure he isn't) And what does "I'm really flattered" mean?

Any help at all would be really great

Thanks xx
What does I'm really flattered mean?
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