Why does my iPhone hotspot connect but not work?

Use these steps first

Restart the iPhone or iPad that provides Personal Hotspot and the other device that needs to connect to Personal Hotspot. Make sure that you have the latest version of iOS. On the iPhone or iPad that provides Personal Hotspot, go to Settings > General > Reset, then tap Reset Network Settings.

If Personal Hotspot is not working on your iPhone or iPad (Wi-Fi

The iPhone itself does not disconnect a hotspot and does not have settings to override any limits imposed by your cellular service provider.

1. Carrier-imposed Data Limits: Many carriers enforce data caps or restrictions on hotspot usage. If you exceed a specific data allowance for the hotspot, the service may slow down or disconnect entirely until the next billing cycle or unless additional data is purchased.
2. Time Limits: Some carriers impose time-based restrictions on hotspot usage, automatically disconnecting devices after a certain period of continuous use to prevent excessive consumption of network resources.
3. Network Prioritization: In periods of high network congestion, some carriers prioritize direct mobile data usage over hotspot connections, causing the hotspot to disconnect intermittently.
4. Device Restrictions: Certain carriers limit the number of devices that can be connected to the hotspot simultaneously. Exceeding this limit might cause disconnections.
5. Roaming or Out-of-Coverage Areas: If the iPhone is in a roaming area or experiencing weak network signals, hotspot performance may degrade, leading to frequent disconnections.

To address the issue, contact your carrier for specific details about your plan's hotspot terms and limitations. They may offer solutions, such as upgrading your plan or adjusting network settings.

Please see the pic below to make it clearer that Hotspot is enabled by a Carrier on one SIM and not by the other Carrier in the same iPhone (Dual SIM).

Also, check the following

1. Network coverage and stability
2. Data Balance
3. On your windows (See if WiFi Auto Joins is enabled)
4. Also, check if you have any stronger WiFi signal around your computer.

Ask the Carrier to change the SIM if nothing works.