The design of the heater allows for the presence of a thermostat to sort of keep an eye on the temperature right inside the device. Like in the automobile engine, the gas in the burner is lit by a spark. Using igniter devices on gas grills, a close observation will reveal that it closely resembles the pilot light mechanism of a water heater.

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Used up and intoxicating gas emissions need to find a way out of the system, else they negatively affect it, so the vent was added for just this purpose. Emissions are channeled out through the PVC pipe, an essential part of the vent.
 

Interesting Water Heater Facts:

• Although instantaneous heaters can give a continuous supply of DHW the rate at which they can produce it is limited by the thermodynamics of heating water from the available fuel supplies.
• Tankless water heaters, also called combination or "combi" boilers, instantaneous, continuous flow, inline, flash, on-demand or instant-on water heaters, are also available and gaining in popularity.

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