Guero is not to be confused with gringo. This term isn't as racialized as the other definitions would lead one to believe. It is a descriptive term used to refer to anyone with a lighter skin complexion. It is NOT exclusive to any one racial or ethnic group( eg: whites and light-skinned Latinos can fall into the "guero" category.)
In Mexico, and in other Spanish speaking countries, it is often a term of endearment used to describe men with lighter skin complexions.
It is in contrast to "prieto", which is a term of endearment used towards darker skinned men.
Hombre 1: Eres gringo buey?
Hombre 2: No idiota. Solamente soy guero. Quien le dijo que todos los Latinos eran prietos? No que hay algo malo con ser prieto.
Hombre 1: Buey, solo te pregunte si o no.
Man 1: Are you a gringo?
Man 2: No dummy. I'm just "guero". Who told you all Latinos are "prietos"? Not that there's anything wrong with being dark-skinned.
Man 2: Dude, it was a yes or no question.