Hydrated lime is one of many different types of agricultural lime sold to consumers as a soil amendment. Also called calcium hydroxide, hydrated lime is made by adding water to calcium oxide and heating the mix. Hydrated lime is also used to make cement, mortar and other industrial applications. Hydrated lime always needs to be handled using gloves, eye protection and a dust- and mist-filtering respirator.
A common use for hydrated lime is to adjust a soil's pH. Each type of plant has a range of soil pH levels in which it will grow healthily. The plants will struggle to grow in soils outside of this pH range, so lime is used to raise the acidity of alkaline soils. Hydrated lime is typically sold as part of a Bordeaux mixture consisting of copper sulfate, lime, hydrated lime and slaked lime. To see if your soil could benefit from hydrated lime or a hydrated lime mixture, purchase a soil pH tester and consider the ideal pH range of the plants you are planning to grow.
A less common, though just as beneficial, effect of hydrated lime as a soil treatment actually has nothing to do with gardening at all. Building structures on top of slanted soils can present certain problems for the stability of the structure being built. So-called high plasticity clay soils are prone to swelling, expansion and overall structural weakness when the soil is abnormally moist. Hydrated lime is one way to combat soil plasticity; by reacting with clay minerals in the soil, hydrated lime reduced the potential for swelling and expansion.
Hydrated lime can also offer myriad other benefits to soils in which it is incorporated. Hydrated lime can reduce the potential for plant toxicity to aluminum, magnesium and other naturally occurring elements in soil. It can also increase the activity of beneficial microbes and micro-organisms in soil and improve overall soil structure and stability. Nitrogen fixation, the critically important ability of plants to absorb nitrogen in certain forms, can be improved by an addition of hydrated lime, though this is highly dependent on the type of plant you are growing.