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when you get water in through the pipes in your home from either a well or city water, that water is seldom pure water. Most of the time you have all kinds of disolved minerals and other chemicals floating along in the water that comes into your home or office. When a Hot water tank works, it boils the water, and heating water is one of the best way's to cause water to separate out the stuff it is carring along with it. So the boiling process of makeing the water hot, causes those mineral and chemicals in the water to separate, and leache out of your hot water tank. It is where those chemicals and minerals collect. Those minerals and chemicals have different colors depending on what the mineral or chemical is.

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Q: What causes discolored hot water tank?
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