That is correct. It negotiates the hotspot. But your phone and carrier must already be setup for it and allow it. There is a disclaimer note on the OS X Yosemite pages as to this.
From bottom of OS X Yosemite page: Mac + iOS tab.
http://www.apple.com/osx/preview/mac-and-ios/
Features are subject to change. Some features may not be available in all regions or all languages.
Additional charges may apply when using your devices cellular network.
*Check with your carrier for hotspot availability.
I assume it works with iPads as well. I have a Verizon iPad Mini that I hotspot on rare occasion. But
my grandfathered unlimited AT&T iPhone plan does not allow for hotspots and I don't see this changing with 10.10.