Traditional water heaters heat water and then store the hot water in a tank so it is there when you need it. However, heat is lost as the hot water sits in the tank and the water heater must continually heat the water. Tankless water heaters avoid this problem by only heating water when you need it.
Because tankless water heaters heat water as you need it, you won’t run out of hot water like you might with a traditional, storage type water heater. So even if you’re the last one to take a shower, you’ll have hot water to use.
Tankless water heaters are also smaller, so they can fit in many places that traditional water heaters cannot, such as small apartment closets.