Lovely means beautiful or pleasant in a warm, unfussy way. A lovely day, a lovely meal, a lovely person. It is one of the most used adjectives in British English and one of the least used in American English, where nice or great would go instead.
It is far broader than beautiful. Beautiful is about appearance and is a strong claim; lovely can be about weather, food, an afternoon, a piece of news, or somebody's manner, and it makes no strong claim at all. That mildness is the point — lovely is warm and slightly understated, which is why it works as a one-word reply meaning yes, good, thank you. Note that lovely ends in -ly and is an adjective, not an adverb, and there is no adverb lovelily that anybody actually says.
1adjectivelovelyBeautiful, or very pleasant.
“It was a lovely afternoon and nobody wanted to go in.”
2adjectiveeasyOf a person, kind and easy to be with.
“Her mother is lovely.”
3adjectivewarmUsed on its own as a warm reply meaning good, or thank you.
“Tea at four? Lovely.”
Too few real examples of this word to estimate which sense is commonest.
lovely is a quality of pleasantness.
Old English luflic was simply love plus -like — worthy of love. The -ly ending that now marks adverbs was once a general suffix meaning like or having the qualities of, which is why lovely, friendly and lonely are all adjectives and none of them behaves as an adverb.
Old English
luflīċ
Middle English
lovely
English, today
lovely
Built from
From Middle English lovely, luvelich, lufli, from Old English luflīċ, luflīc (“amiable, loving, lovable”), equivalent to love + ly.
Etymology from Wiktionary, CC BY-SA