After I moved over to a new user account on my Mac—to try to fix another issue—my Mac OS X 10.10 (Yosemite) and iOS 8 “Personal Hotspot” function quit working.
At first it wouldn’t show my iPad’s availability at all. But after deleting the Mac OS X keychain and resychronizing with iCloud Keychain, I could see my iPad in the Wi-Fi network list as an available “Personal Hotspot” once again but I still couldn’t actually connect to the “Personal Hotspot” on my iPad.
The error that would eventually pop up would be:
Failed to enable Personal Hotspot on [Device]. Check to see if the tethering device is turned on and in range of your computer.
I tried turning on and off Bluetooth, deleting my iPad from Mac OS X's Bluetooth preferences, etc… to no avail.