If someone says you're cute - how do you react?

It depends how you feel about that person. If you like them you have to embrace their attraction to you by showing that you are attracted to them as well. If a boy tells you he finds you cute, most of the time he was scared almost to death to approach you, and you need to take away his fear and show him that he did not waste his time or worry to give you a compliment. You do not need to give him a commitment, but just a nice thank you, smile, and gaze into the eyes, or anything else you can do to further the conversation would be ideal. If you keep talking to him, and more importantly, you keep acting like you want to keep talking to him, then you did the correct thing.

If you do not like him, it is best to be grateful and respectful. Just say thank you and do your best to end the conversation. That will tell him that you are not interested, but will also not hurt his feelings too much.