Line an 8x8 pan with aluminum foil and lightly grease or butter the foil. Set aside.
Combine sweetened condensed milk, semisweet chocolate chips, milk chocolate chips, and butter in a medium-sized saucepan over medium-low heat. Stir frequently.
Once chocolate begins to melt, stir in hot chocolate mix. Stir well until hot chocolate powder is dissolved, chocolate and butter are melted, and ingredients are well combined.
Remove from heat and stir in vanilla extract.
Stir ½ cup (20g) of the mallow bits into the fudge mixture and immediately pour into your prepared 8x8 pan.
Pour the remaining mallow bits over the top of the fudge immediately, press down slightly so that they stick to the surface.
Allow fudge to cool completely before cutting (this will take several hours at room temperature, or you can speed up the process and refrigerate 1-2 hours).
Notes
* These are the mallow bits I use (affiliate link), but I have been able to find them in WalMart in the hot chocolate aisle, too.