As made famous by the 2010 Usher song "Hot Toddy" featuring Jay-Z and Ester Dean, a "Hot Toddy" is a person with whom you conduct a sexual relationship under the implicit understanding that each participant may be maintaining a separate monogamous sexual relationship with another, all of whom who must remain unaware of this activity.
Tim has sex with Jeff's girlfriend Sarah one or more times without Jeff ever finding out, because Tim and Sarah have an implicit understanding that neither of them willtake actions leading to Jeff finding out; Sarah is thereby Tim's Hot Toddy.
A Hot Toddy is when some gives you a blowjob, but prior to doing so, they ingested something spicy, (like buffalo wings, for example). It hurts really bad, and you usually scream "HOT TODDY!" when it happens. It can also be when someone gives you a handjob after coming into contact with a sensitive-skin irritant, like chili flakes. Sometimes it's an accident, but sometimes they know it'll hurt you and they do it anyway to be a bad person.
Person 1: "Ok ready?"
Person 2: "Yeah go for it. Oh yes. YESSSS... Hey wait a minute.. AHHHHHHHHHHHHHHH! HOT TODDY! HOT TODDY! OW! OW! OW! GODDAMMIT RINSE YOUR MOUTH OUT NEXT TIME, OR BETTER YET LAY OFF THE BUFFALO WINGS!"