how do I use personal hotspot and why?

How to set up a Personal Hotspot on your iPhone or iPad - Apple Support

"A Personal Hotspot lets you share the cellular data connection of your iPhone or iPad (Wi-Fi + Cellular) when you don't have access to a Wi-Fi network."

Say, you have a MacBook with you, and you're in a place where there is no WiFi Internet service, but you have your iPhone with you. If your phone company allows it, you may be able to use the iPhone to provide Internet service to your MacBook. The MacBook and iPhone exchange data over WiFi, and the iPhone forwards data to and from the Internet using your cellular data plan.

This counts against your cellular data plan, and the phone company might impose additional limitations.

(*) The support article says you can set up a hotspot over WiFi, Bluetooth, or USB – though in common use, when people talk about hotspots, they're usually referring to WiFi.