How does iPhone hotspots work?

Basically, I have an iPad 2 with Wi-Fi but not 3G. It means if I'm travelling, then I can't get internet connection. I know some iPhone users can share their data. As I don't understand it, I'm looking for somebody to explain:

1. Can a hotspot connect my iPad?
2. How many devices can share data at once?

You can only use this on the newer devices and an iPhone. You need iPad 3/4 on 4G/LTE or an iPhone 4/4S/5 on 4G/LTE plus to pay for 5 GB Personal Hotspot if your contract requires a data plan other than Unlimited Data.

1. Can a hotspot connect my iPad? - Yes
2. How many devices can share data at once? - i thank the limit is 5, i know it's more then one.

it's like a wireless router, you turn it on, give the hotspot a network name (SSID) and password,
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Get a mifi and Be Your Own Personal Hotspot

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