“Personal Hotspot” (or “Tethering”) is Apple’s silly name for using your iPhone 
to share a limited Internet connection to other devices, with the primary 
connectivity being provided to the phone by your carrier.  With the “Personal 
Hotspot” feature, your iPhone broadcasts a wireless signal that your other 
devices can connect with, much as you do home Wi-Fi.  Options also exist for 
using Bluetooth PAN (which still has its uses on devices that have support for 
it) or a USB cable.  It is very similar to, but not the same as, using your 
phone as a modem, because the iPhone shares your connection with all the 
computers and devices connected to it.  You are really better off buying a 
dedicated device for this function though, because the feature has restrictions 
imposed on it by Apple and/or the carriers that make it pretty useless for 
anything but travel situations.

I don’t know about your network, but down here in the UK the “Unlimited” plans 
distinguish tethered and non-tethered usage.  You usually pay extra for the 
feature to be switched on as part of your plan, and then there is typically a 
separate cap just for tethering that is distinct from the unlimited phone 
usage.  Pretty stupid, really, when you realise that you can easily hook up 
your phone to a TV an enjoy a full 1080P HD movie just using the phone.  
Clearly, “Unlimited” is a deception, but our neoliberal advertising authority 
is just fine with it, seemingly because everybody in the industry is doing it 
and they don’t regard it as false advertising so long as only a small number of 
potential buyers are inconvenienced.  Rant rant rant, etc.

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