Guard hairs are reflective, so they act as a sunblock to keep direct heat and UV radiation off the skin. Yes, dogs do get sunburn! Dogs' skin is thinner than humans, and tends to be more sensitive. So rule number one is, never shave your dog all the way to the skin! They need at least a little hair to serve as a barrier.
Undercoat hairs are soft, slightly curly, and absorbent. This enables them to trap body heat and insulate against the cold outside. This is the part of the coat that makes your dog hot in the summer. Removing the bulk of the undercoat allows air to flow freely through the coat and over the skin, helping the dog stay cool. For this reason, a thorough de-shedding treatment is always my first recommendation for hot dogs.
De-shedding: Is undercoat removal enough? For many dogs, a good de-shed is all they need to stay cool. Dogs with medium-length, relatively thin coats (e.g. Border Collies, Golden Retrievers, Spaniels, Setters) tend to do best with this method.
Dogs with very thick coats, however, (Chows, Shelties, Spitz breeds, Pekingese) may still suffer even with undercoat removal.
Sometimes simply shaving the underside helps a great deal; many dogs like to lie on cool hard floors and a belly clip helps them maximize the cooling effect.
For those needing an all-over clip, I prefer to leave at least 1/4 inch to protect the dog from sunburn. Even when doing a full clip, it is still very important to remove the loose undercoat. If dead hairs aren't carded out they can clog the hair follicles and cause the coat to grow back improperly. Be aware that after shaving, your dog's coat may take as long as two years to return to its original color and texture. Regular carding and a high quality diet can help speed the re-growth process.
So what about single coats? Long coated, low shedding dogs (such as Shih Tzus, Poodles, Bichons, and Maltese) can suffer from heat too. Unlike double coated breeds, single coats grow back very quickly and don't alter their texture after shaving. This means you can clip them however you like without fear of ruining the coat. So have fun, and stay cool!