Translated directly from French, "cul de sac" means "bottom of bag" - and in this case means exactly what you guess, this road leads nowhere. It's a dead end.

In South Africa, we normally have these words painted on the entrance to a dead-end road, as well as a small rectangular green sign displaying a T-symbol where the vertical bar of the T is white and the horizontal is red. I guess what they're trying to say is, "slow down lest you come to a sudden and unexpected stop" - and "no, this isn't a shortcut". :)