I guess 2.2 will have wifi hot spot....what does that even mean?
It means the carriers will probably remove the feature from their distributions. I know verizon is offering the ability for free on the Pre and Pixi but I can't see them allowing it on their most popular smartphones without charging for it.
So they'll either charge a fee or disable it. On the upside however, the ROM cooks will probably be able to get it up and running despite what the carriers do given enough time.
Otherwise it means you'll be able to wirelessly connect up to X number of wifi devices to the phone's data connection.
Right now rooted droids can do this. Basically your phone can become a mobile wifi hotspot that laptops and other phones can connect to.
I got a kick out of doing this for my sister's bad iPhone connection. "Hold on! Turn on your wifi!" :P