Can be used to describe a person who is attractive (see sexy) or object of particular recognition.
Can also be used when someone burns someone else.
Person #1: You're stupid.
Person #2: You're ugly.
Person #3: HotDamn!
It uses the old "Hot Damn!!" saying from years ago--thus denoting the OLD out of style FEEL, and that the OWNER of the "Hot Damns" probably doesn't realize his wheels actually SUCK. He might actually look at his own wheels thinking to himself, "Hot Damn, I'm ballin' with these wheels!"
Perfect for making fun of someone's ride on the DL without them knowing what you are really saying, if they overhear you...
that car COULD be cool, except for the Hot Damns he's rolling with!