How does Spectral Blade affect Hydra?

Spectral Blade combined with Flame Blades gives a buff that increases Fire Damage for 1% on each Stack.

Does Hydra get the buff while it is active or if I cast it at say 25 stacks and it drops to 20 stacks, does the hydra still have the same damage as with 25 stacks?

How does this exactly work?

As the hydra counts as pet and pets can be buffed while already summoned, they can also grow weaker if the buff runs out. So in your example, if the hydra is summoned with 25 stacks and you drop back to 20 stacks, the hydra now has 20% fire damage boost instead of 25%. But if you now get back up to 25 stack, they hydra has 25% damage boost again.