Vato is a slur used to describe Mexicans in a derogatory way. Originates from Chicano slang. In Spanish it means "guy". Can be compared with "dude".
The word Vato is a racial slur that has been used historically to degrade and dehumanize mexicans. The word is still used by some people for this purpose, and it is seen as offensive and hurtful to mexicans. If you are unsure about whether or not it is appropriate to use the word Vato, it is best to err on the side of caution and avoid using it in any situation.