Before Tang dynasty, Xiu Cai simply means people with talent. It doesn't necessarily means intellectuals, and have very little to do with the imperial exam. During Song dynasty, everyone who participate the exam can be called Xiu Cai, regardless if they pass the exam. Starting from Ming Dynasty, Xiu Cai was used as a general title for all intellectuals. But the title was actually a lot harder to get compare to previous dynasties.
Xiu Cai is the lowest of the literati class (士大夫). The government won't hire you to do anything, but you are no commoner either. That means you don't need to serve corvee, you don't need to kneel when meeting local major or county officials (you still need to kneel when meeting higher noble and officials), you don't need to make appointment with the county official if you need to see them. And in some dynasty, the government will give you a small monthly allowance, nothing to write home about, but you never need to work in the field anymore.
However, Xiu Cai, being the lowest of the literati, can be an embarrassing title as you grow older. People become Xiu Cai so they can keep taking the exam and become a government official. And being an old Xiu Cai means you're not good enough to pass the advanced exams, you're not capable or smart enough. While the illiterate commoners might respect you, no self respect literati will associate themselves with you.
So an old Xiu Cai (When I say old, I mean anything after 20) was in a very weird position in the system. They're often from poor families, they have escaped from lifelong of hard labor but not quite part of the ruling class either. They often serve as a connection between the common folks and the literati class. They manage books for shop keeper, they write complaint and fight lawsuits for common folks, they teach village schools, they serve as private tutors for local squires' family, and because they're somewhat respected, especially in rural areas, they're often called upon to settle disputes... And of course, most of them would kept taking the advance exam hoping they'll become a Ju Ren (举人), who would be appointed position by the government.
I would compare Xiu Cai to that of a squire. It is a temporary, in-between position. You don't stay squire forever, eventually you want to be a knight. You're respected by commoners due to association, you held some power, but generally despised by full fledged knights. You're far from nobility, but you have a chance to be a nobility if you work hard and play your cards right. Change Knight to a literati, swords into pens, you get the general idea.
Now for those who want to know more about imperial exam, and what exactly can a Xiu Cai do to "level up", read on:
This is how it works (since the name of the exam changes from dynasty to dynasty, I'm using the name for Ming Dynasty):
Say a poor boy (have to be a male, sorry ladies) don't want to be an illiterate farmer like his father, he first need to convince his parents to sent him to village school (often taught by a Xiu Cai, we'll cover that later). This wasn't really that hard to do, because since ancient time, Chinese parents knew the importance of education and would send their sons to school if they have some spare money.
After getting into village school, the boy, let's call him Li, was called "Tong sheng" (童生, roughly translate into young student). The village schoos are somewhat similar to nowaday K-12 schools. Although it normally didn't need 12 years, kids often start participating the Yuan exam (院试), the first level of imperial exam after 4 or 5 years of study.
Yuan exam was held every year by county government. It is the preliminary selective exam, and it's the start of young boys' road to public service, well, it's not really public service, more like emperor service. But you get the idea. Say our boy Li pass the exam, and he now become a Xiu Cai. A rough equivalent to our "college student". If he's hard working and smart, he's probably in his mid-late teen at this point.
Now boy Li has been a Xiu Cai for a couple of years, and read for the next part of his brilliant career. Now here comes the complicated (and also very important) 3 exams.
So he studied very hard, and participate the County Exam (乡试). County Exam were held by local government every 3 years during August, so it's also called "autumn exam" (秋闱). This was THE most important exam. If you pass it, you will become a Ju Ren (举人) or Ju Zi (举子). As a Ju Ren, you are officially a reputable member of the literati. You are in the system. You're qualified to be appointed as the lowest of the government positions, often a village major (知县). While young man Li won't be appointed official right away since there aren't always immediate openings. But he's on the waiting list, and would go to his position ASAP (often very far away from his hometown).
But many people won't stop here, Li probably won't either. He'll prepare for the next round of exam, traditionally held the next spring of the Country Exam, it's called Hui Exam (会试), because it's held the in spring, it's also called Spring Exam (春闱). Hui Exam was a national exam, held in the capital city (Beijing, in Ming and Qing Dynasty), by the department of Rites.
If you pass this test, you'll gain the title "Gong Sheng" (贡生). Gong Sheng will be appointed to higher and more important government positions. Right after the Hui Exam (often 1 month after) is the palace exam (殿试). Like the name suggested, it's held by the emperor himself in his palace. No one will fail this exam, the emperor will rearrange the rank. After you "pass" the Palace exam, you'll be reward the prestigious Jin Shi (进士) title, which is also the highest official rank you can get from imperial exam.
Say our young man Li had gain his Jin Shi title, and he'll probably be appointed to as a local official. He'll receive salary (and can take bribes if he wanted to). The government will award him with house and land, he can take more wives (surely he's already married at this point), have children. He climbed the government ladder, died a happy man with 5 mourning wives and 20 children, hopefully many of them also made Jin Shi. Perfect Chinese dream realized, a poor boy become an literati and a governor.
I kind of drifted off from Xiu Cai, but there you have it the imperial exam in a nutshell. hope that answers your question.