In the sentence "Charles est beau, mais son frère ne l'est pas" what does the "l'" stand for? Does it stand for the adjective "Beau"?
Yes. It is the elided of "le" which is in this case a pronoun refering to the qualificative "beau". It could refer to qualificatives that are not adjectives, as in:
"Es-tu l'assassin de mon père ?"
"Non, je ne le suis pas".