MistressTornaDo sent me this information that defines what a hotwife is. The author is NH_Toys@hotmail.com(full participation definition). The rest is by me.
The Hotwife lifestyle is one in which the husband enjoys having a wife who freely engages in sexual encounters with other men. The dynamics of this type of relationship vary widely, however most of the time the relationship will generally follow this pattern:
• Full participation The husband is publicly aware of his wife’s activities and encourages them whenever possible. In some cases the husband watches from afar while his wife puts on a show just for him by flirting, kissing, heavy petting, and more with other men. In other cases the husband joins in on group sex activities. Most of the time these activities involve multiple men pleasing the wife, but occasionally other women are involved. This is the most popular and the definition of a typical hotwife relationship.
The hotwifing lifestyle does not or rarely involves humiliating and degrading the husband. The central focus of the hotwife lifestyle is that the male enjoys seeing his wife be pleasured by other men(with or without him), but is also dominant as opposed to submissive like the male in a cuckold relationship.
If the male enjoys his wife having sexual activities(with or without himself) this does not necessarily mean his wife is a hotwife, if he loves being emasculated and humiliated then he is a cuckold. You can read more about the cuckold lifestyle here.