Howdy! Welcome to our community of more than 130.000 members devoted to web hosting. This is a great place to get special offers from web hosts and post your own requests or ads. To start posting sign up here. Cheers!
It could stand for a number of words, but usually it stands for "small/little" ... it's a word Chinese people add to nicknames. Say for example your name is "Aaa Bbb Ccc" ... then your nickname could be something like "Xiao Bbb" or "Xiao Ccc" ... it doesn't actually imply that you're small or anything, it's just so that it sounds ... better.
I don't get why they use X for "sh" sounds either. Ask the Chinese government.