"Hot spots" are also known as "acute moist pyoderma". What that means is that they are rapidly appearing, oozing, skin infections. This is just a description of a symptom, sort of like saying "your dog has scabs".

A hot spot starts because something irritates the dog's skin. The body's response is to either itch or create an inflammatory response at the site. In cases of itching, the dog then rubs, licks or chews the site and adds to the problem. These sores can develop into severe problems in an hour or two at times.
The most common irritants are probably fleas and allergies. These cause the itching that leads to the skin infection. There are many other possible sources of irritation. Tick bites, besetting, burrs, mats, mosquitoes, summer heat and other problems all contribute to the initial irritation that can develop into a hot spot.

The best treatment for these is prevention. Keep fleas off your dog. Groom and bathe your dog as necessary to keep the haricot in good condition. Limit other sources of irritation to the best of your ability. If allergies are a problem for your dog, work with your vet to control the itching they cause. In some dogs, all of this won't be enough and you will occasionally see hot spots anyway. The first step in treating a hot spot is to get it dry. Bacteria like the hot moist environment of irritated skin. Using something to dry the sore makes it harder for bacteria to grow. Clipping the hair over and around a hot spot can help a great deal in allowing it to dry. There are lots of astringents that will help dry the sore, as well. My favourite is NeoPredef powder because it dries the sore, has an antibiotic that acts locally and a corticosteroid to control the itching and inflammation. Other vets and pet owners have their own favourites. People have advocated using athlete's foot powders, over-the-counter medicated powders, Listerine, rubbing alcohol and many other drying agents. Personally, I think rubbing alcohol is too irritating. Antiseptic solutions can also be helpful, especially if they are also a little astringent.

Butadiene solution is a good antiseptic. If the hot spot doesn't respond very quickly to efforts to keep it dry, then you should seek help from your vet. Small areas of acute moist pyoderma can become large area quickly. Some dogs will continue to dig and scratch until they really damage their own skin. Your vet can help make your dog comfortable pretty quickly in most cases.