Number is the toggle number.
Hotkey is the keyword and trigger that define the hotkey.
Here's how this command is used. Suppose you've defined F1 as a hotkey with three toggles.
<Text First thing!>
<Text Second thing!>
<Text Third thing!>
If you want to set that hotkey to its third toggle so it prints "Third thing!" you could make another hotkey like this.
<SetToggle 3 Hotkey F1>
You can only set the toggle of one hotkey at a time. For example, the following won't work because it tries to set multiple hotkeys:
<SetToggle 3 Hotkey A-Z> // DOOESN'T WORK
Toggling PIP Windows with World of Warcraft