A hotfix was originally the term applied to software patches that were applied to live i.e. still running systems. Similar use of the terms can be seen in hot swappable disk drives. The more recent usage of the term is likely due to software vendors wanting to either avoid the term patch or give the impression that they were proactively servicing their product.
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A hotfix is a single, cumulative package that includes one or more files that are used to address a problem in a software product (i.e. a software bug). Typically, hotfixes are made to address a specific customer situation and may not be distributed outside the customer organization.
A hotfix package might contain several encompassed bug fixes, raising the risk of possible regressions. An encompassed bug fix is a software bug fix which is not the main objective of a software patch, but rather the side effect of it. Because of this some libraries for automatic updates like StableUpdate also offer features to uninstall the applied fixes if necessary.
In a Microsoft Windows context, hotfixes are small patches designed to address specific issues like Kernel Patch Protection, accessibility service such as Multilingual User Interface (MUI) and freshly discovered security exploits and other concerns of vulnerability. These services are usually in the forms of self-extracting patch files accessbile from Windows Update and compiled into a pack known as a Service Pack, per biquarterly. At times related updates are also available such as device driver updates and framework updates like DirectX componentry. Not all Microsot QFEs are included is service packs however. Redistribution of QFEs is not permitted without a special agreement with Microsoft.
Most modern operating systems and many stand-alone programs offer the capability to download and apply fixes automatically. Instead of creating this feature from scratch, the developer may choose to use a proprietary (like RTPatch) or open-source (like StableUpdate and JUpdater) package that provides the needed libraries and tools.
There are also a number of third-party software programs to aid in the installation of hotfixes to multiple machines at the same time. These software products also help the administrator by creating a list of hotfixes already installed on multiple machines.
The game company Blizzard Entertainment has a different use of the term hotfix for their game World of Warcraft:[1]
"A hotfix is a change made to the game deemed critical enough that it cannot be held off until a regular content patch. Hotfixes require only a server-side change with no download and can be implemented with no downtime, or a short restart of the realms."