Sam: I asked a girl out to lunch today, but she hasn't gotten back with me like she said she would. Maybe she thinks I'm ugly and doesn't like me.
Alicia: You're not ugly; I saw your picture and you're not bad looking.
What Alicia is really trying to say is that her friend Sam IS ugly, but doesn't want to hurt his feelings.
Example 2: (Steve and Mike talking)
Steve: Hey Mike, some girl told me I'm not bad looking today. Does you think she likes me?
Mike: Hell no dude give it up, she thinks you're ugly!