'Hot spots' are rapidly appearing, oozing, skin infections called 'acute moist pyoderma'. 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.
The most common irritants are fleas and allergies. These cause itching that leads to the skin infection. But there are many other sources of irritation. Tick bites, burrs, matts, mosquitos, and summer heat all contribute to an irritation that can develop into a hot spot.
The best treatment is prevention. Keep fleas off your dog. Groom and bathe your dog to keep his coat in good condition. If allergies are a problem, 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 it to dry. There are lots of astringents and antiseptic solutions that will help dry the sore as well. 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 areas quickly. Some dogs will continue to dig and scratch until they really damage their own skin. Your vet can make your dog comfortable pretty quickly in most cases.