What is a tankless water heater?

A tankless water heater is what it sounds like, a water heater without a tank. It heats the water as it used and since there is no tank of water to be used, it provides a continuous supply of water to be used. 

Operation

The heater is normally turned off, but is equipped with flow sensors which activate it when water travels through them. A negative feedback loop is used to bring water to the target temperature. The water circulates through a copper heat exchanger and is warmed by gas or electrical heating. Since there is no finite tank of hot water that can be depleted, the heater provides a continuous supply