The answer to the difference between a tankless water heater and a tank water heater is that tankless water heaters heat water on demand, while tank water heaters store a reserve of hot water. Tankless heaters are more energy-efficient and take up less space, but have a higher upfront cost. Tank heaters are generally more affordable but use more energy to constantly keep a tank of water hot.
Tankless water heaters heat water as it flows through the unit, rather than storing a reserve of hot water like a traditional tank heater. This means tankless heaters only use energy when hot water is needed, making them more efficient. They also take up less space since there is no tank. However, tankless heaters have a higher initial cost to purchase and install. Tank water heaters are less expensive upfront, but use more energy to continuously keep a tank of water hot, even when not in use.