How does gas tankless hot water work?

Answer 1

There is a coil of copper tubing that sits in the flame. When you open the hot water faucet, the flame ignites and starts heating the water. The coil is long enough that the water has time to heat while it is in the flame. That's why you can have hot water as long as you want.

Answer 2

Unlike traditional tank water heaters, tankless systems do not heat a large quantity of water and hold it until you need it. Instead, they heat your water on-demand, when you turn on the tap. A small heating system warms the water as it runs past it in the pipe.