If you're at an Ivy League university, in New York City, or anywhere else where there are a lot of Jews, you'll sometimes hear that someone "looks Jewish." This statement usually means that the person in question has some or all of the following characteristics:

People sometimes decry such descriptions as anti-Semitic, but many Jews do have these characteristics: Milton Friedman and Ben Stein fit this stereotype fairly well, for example. It's worth noting, though, that these traits are by no means exclusive to Jews; many of them are actually characteristic of Eastern Europeans and Russians, and American Jews may possess them only because of interbreeding with this population (Israelis don't necessarily look like this, for example). Besides, members of other ethnic groups tend to possess many of these traits; Italians, Greeks, and (ironically) Arabs get mistaken for Jews quite frequently (and vice versa).

On the flip side, plenty of Jews don't have these traits--for example, Art Garfunkel has a blonde Jewish afro but no other stereotypically Jewish features, as far as I can tell. Nonetheless, people will sometimes claim that someone "looks Jewish" simply because he or she has a Jewish last name. I tried this experiment once: if I introduce myself with my ostensibly Jewish last name, people think I look Jewish. In reality, I look disconcertingly like my German Catholic grandfather, who's 5'11" with fair skin and blue eyes--and if I introduce myself with my mother's maiden name, people laugh at the idea that I could be Jewish.

So there are exceptions in both directions: some Jews don't look like this, and some people who look like this aren't Jews. Nonetheless, if you hear someone use this phrase, they're generally referring to the characteristics I've described.