Is it easy to reach Plaza Mayor and other attractions by subway (I am limited in walking ability)?
Is there a hop-on Hop-Off stop by this hotel?

There is a hopon/off bus stop at the Reina Sofia museum which looks to be about a block away from that hotel. It's stop 20, then it goes up to Salamanca and then to the Place and Opera and it does go to Plaza Mayor after that. If yoiu have plenty of time, that might be the way to go.

As for metro, it's like any metro system, to be honest, so there are stairs in some places. I don't remember there being as long walks as ion some other cities, like Paris, but might be forgetting. However, it's not really a very direct route from Atocha to Plaza Mayor, which is a very old area and there is no metro stop right there, the closest one is fairly far away actually (probably Opera or Puerta del Sol).

You might want to try to learn about the regular bus system. Bus 32 goes from Atocha to right near Plaza Mayor, this is the route.
https://www.crtm.es/tu-transporte-pu....aspx?origen=2

The area around Atocha is hilly and the traffic can be nuts.

Taxis are still on strike in Madrid and Barcelona, so you need to keep check to see when the strike will be over. They are taking today, but who knows.