Some questions...
Does ”どっちがいい？” literally mean "which one is better?", or does it literally mean "which one is good?" but sometimes you're supposed to guess the actual meaning from the context?
Can ”どっちがいい？” even imply that there is a good option and a bad option, or is it always about choosing between two nice options? (e.g. two tasty cakes or two advanced smartphones)
Is ”どっちがいい？” perhaps a shortening of a longer phrase where the meaning is more obvious?
First, as chocolate said in her comment, a question like this using いい is usually about someone's personal and casual preference: "Which do you like/prefer?". In some contexts, this can be a more objective question (eg, choosing from two business strategies).
Second, the Japanese language doesn't have the simple comparative form (such as better, faster in English), and it has a number of ways to make a comparison without using the comparative form.
Questions like どっちが大きい？, どっちが安い？ or どっちがいい？ are very common to make simple comparisons: "Which is bigger/cheaper/better?" The person who makes such a question is usually thinking the two seem to be equally big/cheap/good. It doesn't imply one is big but the other is absolutely small, one is cheap but the other is very expensive, etc.
But, for example, in a rare situation where the questioner knows one is the cheap one and the other is the absolutely expensive one, we say exactly the same: どっちが安い?
- ロサンゼルスに飛行機で行くのに、A社とB社、どっちが安い？
(common; which is cheaper?)- この2つの指輪は、どちらかは1,000円で、どちらかは1,000,000円です！ どっちが安い？
(uncommon quiz; which one is the cheap one?)
