I've noticed this is mainly for Japanese words that are similar to English words such as ホットケーキ (Hot Cake/Pancake), but I don't really see it used for Hiragana mostly it's for Katakana? I also know that Katakana is mainly used for Western words, is there a specific reason why the dashes are used for those words?
It's used in both Hiragana and Katakana and it indicates a long sound. It's not used in Kanji because that character represents something else ("one").
In your example, it's the difference between hottokeki and hottokeeki. The second is closer to the sound in English.
 It's less often seen in regular Hiragana - it will more often include the extra character. When you do see it in Hiragana, it will almost always be in comic books.