This is usually something a girl says about another girl. It can indicte a number of different things, depending on the context.

For instance, if a girl says this about her ex-boyfriend's current girlfriend, or just a boy she really likes, what she means is that she doesn't feel any strong feelings toward the girl, but feels compelled to say something. This statement is meant to make the boy reflect and realize that A) that's very nice of a girl to compliment another girl and B)Well, yeah, she's cute, but she's not as pretty as (girl who made statement)

In another context, this can also be said of a someone, maybe a whore, that a girl doesn't like but doesn't want to seem nasty. It's always meant to reflect positively toward herself, for boys to take their attention off the "cute" girl and notice how cute the other girl is, or at least how "sweet" and "charitable" it is of her to offer a compliment.
Girl: Who was that, you were with?

Guy: My girlfriend, Kaitlin. We've been together a month now.

Girl: Oh, cool. She's cute.

Guy: Yeah.
by I Talk To Flowers February 28, 2009
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(meme) A phrase one bro says to another to indicate that he is attracted to a chick in a nonchalant manor. It can also be a game in which one bro guesses what girl the other is referring to while in public with multiple women around them.
Bro: Damn, Ken. She's actually... kinda cute.
Brah: Hmmm, the blonde? Or that brunette in the pink over there?
Bro: ¯\_(ツ)_/¯
by j john October 24, 2017
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