Short answer: a hot spot is a sore, inflamed patch of skin. It can get worse fast when a dog keeps licking or chewing it. Your vet should look at it.
PDSA calls this acute moist dermatitis. It says the skin becomes inflamed and infected when it is rubbed, licked or nibbled, and that anything that makes a dog chew or lick one spot can lead to a hot spot. Cornell's page on hot spots also covers them as a vet matter.
PDSA says it is important to stop your dog licking or scratching the area, even before you see your vet, by using a protective device such as a buster collar or a body suit. Call your vet for treatment and to look for the cause. Do not put creams or home remedies on it unless your vet tells you to. See when a dog refuses the cone and itching and hair loss.
Ask your vet about treatment, and what started it.
This article is general education, not veterinary advice. If your dog seems unwell, is in pain, or something changed suddenly, call your vet. If it could be an emergency, do not wait.
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