A hypoallergenic dog is a dog that does not shed it's hair as much or doesn't release as much dander as many other dogs.
Short haired dogs would be considered to be hypoallergenic or at least somewhat hypoallergenic but you can still be allergic to the dog even when it's considered to be hypoallergenic.
In simple terms a hypoallergenic dog is a dog that doesn't shed fur or they shed very little fur which qualifies those dogs to be advertised as being hypoallergenic.
Also hypoallergenic dogs dander that sticks to the dogs fur doesn't get released into the air or onto the floor as much as other dogs.
People who are allergic to dogs are really allergic to the dogs fur or dander that they shed that gets released into the air that you breathe in.
Then after you breathe that in you start sneezing, coughing, wheezing having watery eyes etc.