Sometimes it helps to understand how things work before deciding if you really want to commit to buying them. When it comes to tankless gas hot water heaters, you may well be thinking of getting rid of the old tank... so you want to be sure the thing you replace it with works!
Instant hot water heaters do not heat any water that you do not need, but rely upon heating up the cold mains water every time you open a faucet. Considering that most mains water is around 50 degrees Fahrenheit and we use it at over a 100, this is fairly impressive.
The way a gas tankless water heater manages to increase the temperature of running water by 70 or more degrees is by spreading out the water and applying fairly intense heat to it.
If this sounds like it might be dangerous, rest assured that a modern natural gas tankless water heater or propane driven unit is a very safe piece of equipment, with sealed units and cleverly designed safety features.
Where you really win out with gas propane tankless water heater or natural gas versions is in the savings you will see on your bills. Gas is well priced and efficient, and being on demand it only uses fuel when it is actively heating the water you need.