They heat only the amount of water that you need and only when you ask for it. Conventional water heaters are meant to store and heat 40 to 50 gallons of water, whether you need it or not. This consumes a lot more energy, and results in larger energy bills.
Besides saving energy, tankless water heaters also require less space for installation. If you have a small house, then a tankless water heater is your best option. They don’t store water and therefore, require a smaller space for installation. They are easy to install and last up to 20 years with proper maintenance. If you require a large amount of hot water every day, you can even get multiple small tankless water heaters installed in various parts of the house. It will still be a lot cheaper than conventional water heaters.