A patch is a program that makes changes to software installed on a computer. Software companies issue patches to fix bugs in their programs, address security problems, or add functionality.
Hotfixes are Microsoft's version of patches. Microsoft bundles hotfixes into service packs for easier installation.
Other companies have also adopted Microsoft's nomenclature of hotfixes and service packs for updates to their own software. Sometimes, a hotfix refers to a patch that can be applied without restarting the system. This is particularly useful when the system provides a critical service, such as a web server.
Source : http://kb.iu.edu/data/algb.html