As always, context and circumstances.
So you could use 小姐 anywhere in the World to politely address a young Chinese girl in an ordinary social setting, and she would not be offended. This is the contextual part.
But, if you similarly address a young Chinese girl, (or any girl of any nationality for that matter), and followed it up with a naughty wink of the eye, what do you think she would think? This is the circumstances part.
I believe 小姐 got a bad press because of the 19th century sudden proliferation of girlie drinking bars and hostess clubs in mainland China / Hong Kong / Taiwan / Singapore, etc, where the "Mummies" often refer to their charges euphemistically as 小姐s (perhaps to imbue some measure of respectability)
In fact another innocuous term is also used, namely, 姑 娘, for their more matured charges.
BTW, 小姐 has also for the better part of the modern era being used to address waitresses in Chinese restaurants.
Another term, this time for males, which has gotten a bad press is 大 哥. It ordinarily means elder brother, but because of movie usages, it now also means the head of a criminal gang.
And shouting out 大 哥! across a crowded restaurant to address someone may cause an unintended misconception.