I love hearing all these different takes! I'll throw in my two cents. I see "Cupcake" used during their reunion as a bit of a barb, but also a bit of an olive branch.
"Cupcake" started out as Vi (flirtingly) poking fun at her fancy frilly Piltie upbringing ("You're hot, Cupcake.") It's a teasing little nickname - it's Vi being silly.
And then again we hear her use it again when she's been stabbed by Sevika. They have some silly banter about it! ("Stop callilng me that." "But you're so sweet... like a cupcake!")
Then we get "It's been real, Cupcake," on the bridge. Here, it serves as a fond callback to how this all started, their banter, and the relationship they've started to form. But she's still trying to keep her tone light; again, she doesn't want to get too emotional. It's her small way of protecting herself - and her heart. Vi can be amazingly tender and affectionate sometimes, but she can also be kinda gruff.
Next usage: oil and water. "Do yourself a favour, Cupcake. Go back to that big, shiny house of yours, and just forget me." This time, unlike the others, I do think that this is Vi putting up her guard. She's trying to be all tough and storm-out-of-the-council-y. She doesn't want to get emotional/be vulnerable right now. I also think Vi using "Cupcake" here as a slight jab. It's worth noting that she's just been very much disregarded and looked down on by the councilors (especially Salo, screw you Salo) in the scene immediately preceding this. They even threatened to have Enforcers escort her out! I think she was still smarting from the blatant classism, and I wonder if the "Cupcake" this time was part of her grappling with the gulf between their respective upbringings.
In season 2, when they reuinite on the ridge in season 2, Cait takes down Vi, they trade some toothless, relatively silly barbs (I LOVE THAT THEY GET TO BE SILLY SOMETIMES IT'S SO CUTE), and Cait even gets a chuckle out of Vi.
"Try not to sugarcoat it, Cupcake."
This time, I think Vi's still protecting herself to some degree. She doesn't quite allow herself the intimacy of saying Caitlyn's name. Like someone else said, she can't even bring herself to look at Caitlyn for most of the scene. But also, like on the bridge, the name serves as a callback to their shared history. "Cupcake" was part of their lighthearted banter way back when they first met. So I think when Caitlyn hears Vi call her that now, even after all she's done, it brings her back to those earlier days.
Things aren't like that anymore. But maybe, if Vi can still have a chuckle and use a silly nickname, maybe they can reconcile.
