Used to describe a new product or trend that is healthier, cheaper, or wussier (but rarely all three) than the original.
See Miller Lite, Kazaa Lite, lite rock.
In its proper use, lite should appear AFTER the noun it is modifying. This gives the term an appropriately quirky feel.
This is often used as a way of getting buyers who are interested to pay for the full product when they wish to use the features that the lite version does not support.
Sometimes there is a lite version of a product that even has a free version with more features, but not everybody requires these features.
Winamp Lite (real example)