Hotlinking is like cheating the internet.
Normally, if you want to have an image on your site/blog/bulletin board/whatever, the image needs to be on the server that has that site on it.
Pretty simple; the server with the webpage, also has the image.
With hotlinking, thought, you can get around this limitation, and use images from a different server. What you need to do is get a free image hosting account.
This will let you store your photos on a webserver that is (always) connected to the internet. Then, what you do is upload an image to your image hosting account. This is an image that currently exists on your har drive, or some where else on the net. After you have done that, get the "html image tag" from that site. (on photobucket, it is) directly under each image.
Take that tag and put it on your myspace/blog/whatever, and all of a sudden you have an image on that page, that is coming from somewhere else :)