How each one actually works
A tank water heater keeps 40-80 gallons of water hot and ready at all times, reheating it as it's used. A tankless unit heats water on demand as it flows through, with no standing reserve — which is why it never "runs out" mid-shower, but also why its output is limited by flow rate rather than tank size.
Upfront cost versus running cost
Tank units cost less to buy and install, which is why they remain the more common replacement. Tankless units cost more upfront, largely due to installation requirements like venting and sometimes gas line upsizing, but use less energy over time since they're not keeping a large reserve hot around the clock.
Which fits which household
A tank unit is usually the practical choice for smaller households or budget-focused replacements. Tankless tends to make more sense for larger families running multiple showers and appliances back-to-back, or anyone who's tired of running out of hot water during a busy morning.
Lifespan and maintenance
Tank units typically last 8-12 years. Tankless units often last 15-20 years with proper maintenance, though they do need periodic descaling, especially in areas with harder water, to keep their heat exchanger working efficiently.
There's no universally "right" answer here — it depends on your household size, your existing gas and venting setup, and your budget. We can walk through the actual math for your specific home before you decide.