How it works:
Water heaters heat your home's water by taking in cold water through the supply pipe, heating the water until the temperature reaches your desired heat setting, and then sending hot water out the delivery pipe to your homes piping infrastructure.
Tank water heaters also have the job of keeping the water warm after heating awaiting your use. The water is kept warm by insulation wrapped around the tank. The amount of hot water available is dictated by the gallon size of your traditional water heater, or heating capabilities of your tankless water heater, and the recovery rate of your water heater.