What is a "hot spare" with regard to ZFS RAIDZ on FreeNAS?
I'm hoping that it means an extra, attached disk that can automatically take over for a failed disk in the RAID ... ?
If so, how do I set that up?
Yes, that is exactly what a hot spare is. The hot spare drive would occupy a drive bay and could be assigned to one or more data pools (global spare), and would automatically start a rebuilding process in the event of a failed disk.
This is in contrast to a cold spare drive, that would sit outside of the server/enclosure in order to be swapped manually when there's a failure.
the FreeNAS docs are the best place to get this information. Take a look: http://doc.freenas.org/index.php/Volumes