In this blog we will discuss that how we can apply hotfix and create its deployable package in D365. First extract your hotfix zip in your folder explorer then run below process as shown in images.
Note: In my case, Hotfix is for ApplicationSuite Model.
After applying the hotfix create its deployable package as shown in images.
For installing deployable package in any other development environment. Please refer this blog: Install deployable packages by using command line instead of LCS in D365