Unlike a tank water heater that heats the entire 50 or 75 gallons of hot water all the time, a tankless water heater heats the water as you need it. When water starts flowing through the tankless water heater, it senses the movement and the quantity of hot water being requested. It will heat the water to the set temperature while it passes through the unit (like a reverse radiator). It will only heat as much water as is needed - so one faucet needing hot water "little fire" or 3 showers being operated simultaneously "BIG FIRE". And when no water is being used "No Fire"