How can I regain the Instant Hotspot feature in Yosemite after noticeable errors?
While other answers here may help troubleshooting other causes of instant hotpsot failure, mine was caused by having two iCloud accounts used for keeping some syncing features separate. 

Steps I took to get it working:


Turn on bluetooth and wifi on both devices
Connect both devices to same home wifi connection
Sign out of all icloud accounts on both devices
Restart both devices
Sign into both icloud accounts on iphone
Sign into both icloud accounts on OS X
Restart both devices
Sign out of main icloud account on mac
Restart mac
Sign into main icloud account on mac
Restart mac
Sign out of main icloud account on iphone
Restart iphone
Sign into main icloud account on iphone
Restart iphone
Check wifi on mac, profit


In my OS X console, See confirmation of Handoff:

AppleIDAuthAgent[285]: SERVER AppleIDAuth: Adding certificate for "&lt;my-apple-id&gt;@?????.???", "&lt;certificate number&gt;" to keychain, serial#="&lt;iOS device serial number&gt;" (updateAccountWithCertificateResult()/AppleIDAuthenticationImpl.cpp #225) accountCheckDispatch

Note that correct Instant Hotspot functionality is as follows


Instant hotspot should show up even if "Personal Hotspot" is turned off on the iPhone
Instant hotspot should show up even if Mac and iPhone are connected to other Wifi networks
Instant hotspot should show up even if phone is locked and in your pocket
Instant hotspot should show up even if iPhone has never been paired to the mac before
Instant hotspot will not show up if bluetooth is turned off on either device