Most Helpful Girl
Simple. Cute is dimunitive, sometimes teasing; it can also refer to 'ugly but adorable'. Cute is used interchangeably with handsome at times, but not a synonym for 'hot'. Babies and bugs are cute, but you wouldn't call them handsome, or hot. If you do, you're a psychologist's wet dream.
Most Helpful Guy
When they use cute, it's most likely because they don't want to sound abrasive. It could very well mean that you look handsome but a lot of girls aren't forward enough to say that.