Well, like it or not, you are adorable. Maybe that's what they were commenting on. (Small women get called 'cute' and 'adorable' more often). Cute woman + pretty but short dress = adorable! Lol
Actually that's not the word I'd have used to describe your outfit. It's not cutesy or twee in any way -- it's chic and fun. The colour gives it a more serious edge, too. I agree with Suz about the 'gamine' element of outfits like those.
I grappling with this issue a bit. Short women tend to look good in short skirts. We have less leg to show, and a short skirt actually makes you look taller. The trouble is, they are cute. High school girls wear them for that reason. Especially as I get older, I'm leaning away from anything that skews too 'cute'.
For what it's worth, I think you have styled that dress in a way that isn't too cute -- wearing it with dark tights and short black boots makes it more your style. I think it's fabulous!