Translation:Your child is very pretty.
As far as I've experienced in conversation, beautiful is just deeper and more serious than pretty. There are some things that sound weird when you call it beautiful (which I don't exactly know how to explain much). But as far as I know, beautiful is more limited to a person's features; not their clothes, not their actions, but (I think) their very being as a person (?) :-)
美 is 'beauty' while 漂亮 is 'pretty' If you say 'beautiful' it's 美丽 美丽 is in a deeper and more serious description of attractiveness as opposed to 漂亮, as far as I've learned growing up. For instance, you could describe someone with both 美丽 and 漂亮, but if you're gonna be describing things like what they're wearing or how they're behaving/doing something, it's usually just 漂亮.
That's just based on my conversational experience, though. I don't know about how they do that here :-)
Most Chinese courses start with simple A=B constructions and teach that 是 means "is". So, you make that association in your mind: '是 means "is". Got it!' But then you get a little further along and start hitting exceptions to that rule, and nothing makes sense for a while!
What I think needs to be mentioned from the start is that 是 is only for nouns. So in an A是B construction, B can't be an adjective. You really are saying that B is the thing that A actually is (ie another noun), and not just a quality that A has, for example.
So, while "is" is often a good translation of 是, 是 is not always a good trandlation of "is", as its usage is far more limited than in English.
To people saying that it's creepy, it's kinda not, if you think about it in a way similar to when you pass by a mother with a cute/adorable baby in her arms, and you just can't help but to gush at such an innocent thing or to compliment/praise the mother for her offspring. "Aww how cute!" "What a beautiful baby!" Except, in Chinese, you don't straight up say 'beautiful'; you say 'pretty' instead.
Cute yes, beautiful no. Adults are beautiful, children are cute. Didn't always used to be that way even say 15 years ago but nowadays it's regarded as creepy too.
You can describe something that a child does as beautiful though. So, that dance was beautiful. Isn't she beautiful is an alarm signal going off somewhere.