The more modern use of this phrase is not kind. It means the speaker is suggesting the other person is not smart, childish, or unaware. The speaker is saying they themselves are then more smart, do understand things, and are more advanced by inferring the other person is lesser.

It is used to comment on something cute/sweet, but usually implying it is a little pathetic. It is often said to/about children and old people (and pets), for example, if they bring you a gift, or are forgetful, or say something incorrectly, but in a cute way. It is basically saying, "Aw, you tried your best". There are definitely some people who say it in a non-condescending way, but I mostly hear it used with the extra patronising meaning.

Bless your heart is an expression that means that person said something or offered to do something impossible or not very smart (dumb) in this case . In other situations it could mean they did something sweet or nice form someone and went out of there way to do so .