Reduced to an extremely simplistic explanation, a Wi-Fi hotspot is really nothing more than the same type of access point you might find in any home with what is known as a gateway added. A gateway is a technical method of allowing users who are wanted through to the connection while keeping anyone who is not wanted out from using the service.
Oftentimes, the access point hardware used in a hotspot setting is equipped with higher output power, (technically referred to as EIRP), or a higher gain, directional antenna, which allows for a greater range for the customers to be able to connect the service. In many cases this is necessary due to the size of the establishment that is providing the service. In cases of a large hotel, more than one access point will be utilized and it is not unusual for a customer to be able to see more than one access point with their wireless device. Should this happen, it is recommended that the access point with the strongest signal be connected to for the best results.
Hotspots broadcast a beacon that makes it possible for a customer's wireless device to see that the access point it there and available. The need for a preset password to gain access is determined by the hotspot's management, as is the case in many hotels and motels.
Hotspots are deployed in one of two varieties, paid and free.
Paid hotspots usually service a captive audience, as one might find in an airport or with overnight lodging where having Internet access is something that a customer would be willing to pay for.
Free hotspots are generally provided as a value added service, one that is meant to either entice a customer into an establishment or to prolong their stay. Occasionally, advertising is injected into the Internet connection as a method of generating revenue, but this practice is beginning to fade away as it is pretty much universally disliked.
From the client side, connecting to a hotspot is a relatively painless experience once access has been granted. Most Wi-Fi-equipped devices will immediately recognize that an access point is available and will attempt to connect to the access point. If paid access is required, typically a gateway screen will be presented and the procedure for paying will be displayed. Once payment has been processed, access to the Internet will be made available.