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. Lately the term has been more generally used as described below.

The more recent usage probably originated due to Software vendors wanting to either avoid the term Patch or give the impression that they were proactively servicing their product.

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.

In a Microsoft Windows context, hotfixes are small patches designed to address specific issues, most commonly to freshly-discovered security holes. These are small files, often automatically installed on the computer with Windows Update (although some may only be able to be obtained via Microsoft Support) and could contain a hot patch eliminating the need for a reboot.