Meaning of "Caucasian"
When I search the definition of Caucasian in the NOAD, I find the following definition (it's the first of three definitions):
- (often offensive) of or relating to one of the traditional divisions of humankind, covering a broad group of peoples from Europe, western Asia, and parts of India and North Africa. [ORIGIN: so named because the German physiologist Blumenbach believed that it originated in the Caucasus region of southeastern Europe.] • white-skinned; of European origin.
In a note, the dictionary says also
In the racial classification as developed by anthropologists in the 19th century, Caucasian (or Caucasoid) included peoples whose skin color ranged from light (in northern Europe) to dark (in parts of North Africa and India). Although the classification is outdated and the categories are now not generally accepted as scientific (see usage at Australoid and Mongoloid), the term Caucasian has acquired a more restricted meaning. It is now used, especially in the U.S., as a synonym for white or of European origin, as in the following citation: the police are looking for a Caucasian male in his forties.
Is Caucasian understood to have these meanings also in other English dialects?
Yep. In my own experience, casual use of this sense of Caucasian is just as prevalent in the UK and Australia as in the US. Searching for it in the Sydney Morning Herald and the Daily Mail confirms this with plenty of home-grown examples.
On the other hand, at least some British publications make an effort to use it more precisely: e.g. searching in the Guardian, most uses are either specifically discussing Chechnya, Georgia, etc., or else are in direct quotations.
As far as I know, the usage for Caucasian meaning "white people" is only common in the US. I was quite startled, when I came across the term filling out some US forms. Beforehand, traveling in Europe (also UK), I was not aware of its broad definition.
Searching for the term in the archives of 'The Economist' also gives you mostly hits with its more narrow meaning, referring to the Caucasus.
See also http://en.wikipedia.org/wiki/Caucasian_race