To me I hate the word I know it is usually a compliment but I get called cute so often it makes me mad, when I think of cute in terms of people I think of short and fat. But cute used for anything else I think of it as fluffy.
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The problem is there are so many different means that can be used when talking about someone in that manner so each person may have a slightly different scale as to what means exactly what to them.
However 'cute' is always still a compliment. To me cute means...well, cute...I don't know how to explain it. But it's a good thing, it's preferable in a way. I may think a girl is hot, but to me that just means she looks really good but I probably wouldn't want to be with her. I like girls to look more normal, which is kind of where cute comes in.
Also I think cute is an appropriate answer for certain situations. Such as when you meet someones boyfriend/girlfriend, you say something like like "He/She's cute", not "wow look at the fill in the blank on her, I'd like to..."0