The three essential components that make wifi work are
The radios. These generate the carrier waves 2.4 ghz / 5ghz (or both in dual bands ) and encode the data on the wave according to the modulation scheme. The total speed of the network depends upon the kind of modulation used.
The antennas that serve as the interface between transmitting and receiving devices. They are responsible for sending and receiving signals. Portable wifis have integrated antennas. Most home routers have external antennas where as carrier grade wifi may use custom antennas for long distance transmission.
The operating system that makes the network "intelligent". This is the software part that controls the operation of radios and ties together the networking layers into a coherent system that everyday users can work with.
Now the actual operation includes many more details but this is the general principle of how wifi or any wireless system works.
A hotspot is basically an internet access point. Remember that wifi is a networking protocol. It can work without the internet. A wifi hotspot refers to technology that lets people access the internet via wifi. A wifi hotspot uses the same technology as normal wifi. There may be a few customizations depending upon its intended use.
A public wifi may need some kind of registration and OTP whereas a personal hotspot like the ones used in home via a wifi device or mobile tethering are simple SSID and password based. Besides that there is no difference.
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