For me there is also something weird going in in personal/instant hotspot in iOS 12 (12.1.2 for me) with iphone SE and IPad Pro 9,7.
In iOS 10 it worked perfectly, in iOS 11 I had to try to connect 2-3 times, but it worked and in iOS 12 it is a mess....
So after countless hours to figure personal-instant hotspot issues in iOS 12 I hope to give you also some insights:
In all my successful scenarios I have to switch personal hotspot ON in settings. In IOS 10 and 11 it worked also with OFF when I tried to connect with IPad to Iphone on same Apple ID.
Successful connection with WiFi:
Personal Hotspot ON, Bluetooth OFF on both devices (can be turned on after connection established), Enter Password once on IPad. Works like with every (even non-Apple) WiFi Device.
If I turn on Bluetooth on IPad and Iphone and try to select my Iphone SE in Settings->WiFi on IPad - it is NOT working (unable to start personal hotspot....). It makes no difference if Iphone and IPad is paired or not with Bluetooth.
Successfull connection with Bluetooth:
Pair Iphone and IPad: Turn Personal Hotspot ON on Iphone. If Personal Hotspot is set to OFF I am not able to see the Iphone in Bluetooth device list!
On IPad go to Settings->Bluetooth and select Iphone from “other devices” list. Confirm Pair Dialog on both devices. Then in my case there is always an immediate personal hotspot connection shown on Iphone (the blue bar top of iphone screen), even when IPad is still connected to another WiFi network.
To end this Personal Hotspot connection disable Personal Hotspot on Iphone or go to Settings ->Bluetooth -> Iphone (your iphone name) press (i) -> Disconnect
Now here comes the trick which I just found out by accident: If I want to connect via Bluetooth successfully again I CANNOT select the Iphone in Settings -> WiFi (unable to start personal hotspot....). Instead I have to go to Settings -> Bluetooth -> select Iphone from device list to connect - and the personal hotspot is working! (Personal Hotspot has to be turned ON in Settings to be able to do this)
In this case WiFi on IPad and on Iphone can even switched to OFF! So only Cellular Network and Bluetooth, no WiFi at all. Maybe even less battery drain with Personal Hotspot - but I have to check this out.
If the connection is lost go again to Bluetooth Settings and connect to Iphone.
So in short summary (In my case with Iphone SE and IPad Pro 9,7 and iOS 12.1.2):
- Personal Hotspot has to be turned always ON to make it work.
- For Personal Hotspot with WiFi: Bluetooth has to be turned OFF
- For Personal Hotspot with Bluetooth: I have to pair the devices once and connect to Iphone in Bluetooth Settings and NOT in WiFi Settings! WiFi can even turned off on both devices.
Still a little complicated and cumbersome, but predictable.
I hope this is fixed somehow soon. Any difference in 12.1.3 ?
Also it would be nice to establish a Personal Hotspot connection in Control Center and not in Settings.