Mexican slang.

The literal translation is blonde.

It’s kind of like the Mexican answer to the n word in that it’s called out to white people or darker skinned if they’re either mixed or getting pale or acting like high society.

It’s not seen as derogatory in that even waiters use it in a friendly manner, usually when a white person walks in, but the connotation can be that of calling someone girly.

The underlying factor is that they’re essentially calling someone out in a subtle manner as if they’re looking to rise above the class ranks by being a source of creating offspring with lighter colored eyes or skin, but in a sense it can be used as a term of endearment of sorts in that they’re sort of bragging about hosting a güero in their presence but it’s usually left ambiguous whether they’re actually happy about it or just making fun of someone’s lighter skin tone indicating a certain leniency to being fragile and sensitive to things in general.

To further emphasize the insult value it can be used with another word to create a double insult like for example: pinche güero/fucking blonde or güero joto/blonde faggot.

However, if it’s not used with another word like that it’s unlikely being used as an insult, and is most likely simply them referring to you by race as a simple means of greeting you.