Hotspots are usually superficial bacterial infections of the skin. They can be caused by anything that irritates the skin enough to allow bacteria to get a foothold and grow. This produces itchiness that makes the dog chew or scratch, which further damages the skin, leading to a bigger area of infection....... and the cycle can go on rapidly and spread widely. I don't know if the name comes from the inflammation that is  visible, the warmth around the wound due to the inflammation or the rapidity with which these skin infections can appear and spread. What is usually seen is an area of hairloss with very red skin that may be exuding serum. In some cases there
isn't much hairloss but the skin gets crusty or scabbed, anyway. Keeping the areas dry helps to limit their spread but it is often necessary to use some form of itch control to get these to resolve.