Well, it could be about cheating, but i honestly don't think so. The beautiful lie seems not to be to himself, as it would be the case if he knew the other one was cheating.
Also, the second part of the song seems to be the mate telling him, and I don't think that it would say that if it was cheating.
Before the post of Larin, i had two theories, but now i'm inclined to agree with him.
The first theory, which is weaker, is that is about someone that is in love with another, but is afraid to show his feelings or try something, because it is afraid that the other people will not want anything romantic and that would only set them apart and ruin their present condition.
That theory is based mostly on the "I would die if you find out" and the "i tell i beautiful lie everytime i did not open my mouth", in which the singer seems to have this feeling that he doesn't have courage to show and that he does not want the other to know.
Problems with this theory: this lie is not beautiful, he mentions blame and the fact that he could love her more, which does not add up and seh calls him baby, which suggests that they already have a relationship.
Phew.
Second theory is that they are in a relationship, but not a very serious one, and that is about to implode, because both of them have this failure to open up and give in. They are together, but none of them are able to open up their mouths about the feelings, or love the other to fullest extent and they tell this beautiful lie that everything will stay the same without further commitent of effort, they will continue this without anyone getting hurt. Something along those lines.
This is more plausible, but then again, i guess i may be biased on this one.
But, i guess farin's theory is way more accurate, and I cannot find any flaws on the interpretation. It does add up with the lie beeing beautiful, with him not blaming the other and reconizing that he could loved her more but just can't, and knows that everything will not stay the same and they will eventually break up cause his feelings are fading...
Anyway, thanks for the help, the welcomes, and if anyone has any other views or thoughts i'd be glad to read!