The main difference between traditional tank water heaters and tankless systems lies in how they heat and store water. Tank models keep a large supply of water heated at all times, which can lead to energy loss when the hot water isn’t being used. In contrast, tankless heaters heat water instantly as it flows through the unit, providing continuous hot water on demand. Tank heaters are less expensive to install but take up more space and have a shorter lifespan. Tankless systems cost more upfront but save energy, last longer, and are ideal for homeowners who value efficiency and convenience.