What does it mean when a patent is cited as prior art in another patent?

To expand a little on Steven's answer, you only infringe a patent by what you do commercially, not by what you say or show in a patent. So your invention only infringes at all if you are offering your invention for sale etc...

Still, if you are infringing, then showing your design in your own patent application might alert the patent owner. In fact we did recently find an infringement because we noticed someting the same as our invention in another company's (later) patent drawings. Our patent was cited as prior art against theirs. Their patent application was just the clue that infringment might be happening, however. It was not infringemetn in itself. We then had to find the actual product on sale and compare the product features with our patent claims.