Mrs Hotbed is a real seamstress in Ankh-Morpork. Which is to say, she is a woman who has more in common with Sandra Battye than with Rosie Palm. She is referenced in The Truth as the woman to whom Sacharissa Cripslock intends to take a borrowed ballgown so that it can be, er, let out a bit for her size.
Hot-bedding, or hot-bunking, refers to a situation where there are more people than beds in a given environment. In most naval submarines, where space is at a premium, there might be one sleeping berth for every three crewmen (although this ration has apparently been improved in recent years). Men woud sleep in shifts, the occupant changing at eight-hour intervals depending on the duty roster. The state of a bed continually slept in for several months can be left to the imagination. This would be a very common situation in Ankh-Morpork!