In 2005, celebrity Paris Hilton began using "that's hot" as a catch phrase, increasing the popularity of the less common "that's cool" meaning.
Chad: Check out my new miniskirt.
Derek: That's hot!
The recently popularized meaning:
Chad: Check out the celebrity phone numbers I downloaded from some the net. Some stupid famous chick had them on her mobile phone and they got stolen.
Paris: That's hot!
The phrase is used after basically any statement.
Used in everyday speech.
Ryan: That's hot
Roxy: Like my new Gucci shades?
Lauren: That's hot
Random guy: I robbed a bank
Paris Hilton: That's hot
Levi: That's Hot.
Adam: What did you just say?
Levi: That's hot.
Levi: What was that for? That fucking hurt.
Adam: Eye gouging it the suitable punishment for saying "That's Hot".
You said it twice, therefore you are blind. Say it again and I get to kick you in the nads until you can't breathe. SAY IT AGAIN!!