Quote Originally Posted by Segev View Post
Are they pronounced differently, or is it like "they're, there, their" in English?
They are different. The difference may sound subtle to non-Chinese speakers, but it is distinct. Shao is pronounced pretty much as it looks, "show" which rhymes with "now". Xiao has the extra "ee" sound before the "ow", like "sheeow" (still rhymes with "now).

That's not even getting into the different tonalities and contexts which distinguish different words that are Romanized exactly the same.