What does ちび Chibi mean?

Chibi means small, and applied to a person it means short. The English fandom sense, naming a drawing style with an oversized head on a shrunken body, is a later borrowing that leaves the original register behind.

A word about size

Written in kana, with no kanji in ordinary use. It describes stature: a short person, a small animal, the runt of something. It also attaches to names as a nickname for the smallest member of a group, which is where any warmth in it comes from.

The warmth is conditional. Between friends it is teasing. From a stranger it is a comment on someone's body, and the word carries the same edge that shorty carries in English.

What it is not

It does not mean cute. Small things are often found cute, and the association rides along, but the word itself reports a measurement and a judgement about it. A person described this way has been called short, and whether that is affectionate depends entirely on who is speaking.

This is the register point English usage loses completely, since the English sense has no capacity to insult anyone at all.

How it became an art style

Manga and anime use a squashed, simplified rendering for comic beats: characters collapse into a two-heads-tall version of themselves for a joke and snap back afterwards. English-speaking fandom needed a name for that convention and took this word, presumably because the drawings depict characters made small.

The naming has stuck so thoroughly in English that the fandom sense is now primary, and English speakers meeting the Japanese usage often assume it is the metaphor rather than the source.

Why borrowings drift this way

A word crossing into another language keeps whichever sense the borrowing community had a use for. English fandom had no shortage of ways to call someone short and an acute shortage of ways to name a specific visual convention, so the second sense was the one worth importing.

The same process produced the English senses of seinen and doujinshi. In each case the borrowed meaning is not a mistake so much as a selection, and in each case the selection quietly discards the part that tells you how the word feels to use.

The practical consequence

The English and Japanese senses are not interchangeable, and the gap is about politeness rather than accuracy. A word that describes a drawing style in one language describes a person's height in the other, and only one of those can land as an insult.