My co-worker and I were talking this morning about the new phones that act as hotspots and what the difference was between that and phones that allow tethering.  To me, they seemed to be the same, but there is a difference!  After Googling and reading several different definitions, I found this on a T-Mobile forum and I think this fellow, Ed, says it best, although I have taken liberty to expound just a bit:

• 1. Wi-fi hotspot coverts your Mytouch 4G into a wireless router where you can connect up to 4 computers or devices, wirelessly, to the internet. USB or Bluetooth Tethering is when the phone becomes a modem and you can connect your laptop (I don’t know if you can connect a desktop) or tablet using the USB cable/ or Bluetooth  and after enabling your phone (going to Settings/Connect to PC/Default connection type/USB tethering) you can navegate the internet on your computer.
• 2. I can connect so far via USB tethering without paying, some claim they can also connect via Hotspot without paying, I haven’t been able to do it, may be I’m lacking skills.
• 3. Wi-fi hotspot goes against your data plan. Making phone calls on wi-fi goes against your minutes.
• 4. As I understand as long as you do not agree and sign up, even if you are able to connect via USB tethering and/or wi-fi hotspot, there shouldn’t be any charges.

Now, I need to point out, this came from a forum, so when it comes to the charges,  proceed with caution.  I know that I ‘tethered’ my Archos to my phone and did not suffer any additional charges.  I did not have to enable anything.  Actually, it wasn’t seeing my wireless network after I had connected to a friend’s network and later returned home, and it just picked up my phone’s bluetooth signal on it’s own.

~Sunny