Flash water heaters, often called tankless water heaters, are more complex than traditional water heaters, so there are more components that can malfunction. In addition, traditional systems have been around much longer than tankless systems.
Traditional water heaters are fairly simple systems. A large tank of water is heated using electrical heating or fuel combustion, and the heated water is sent through pipes when needed. A simple thermometer starts the heating process when necessary, and a pressure-relief valve ensures system safety. However, keeping a tank of water heated at all times wastes some energy; tankless systems, which heat water on demand, provide better efficiency.
Tankless designs heat water as it flows through them, and most systems lag only briefly before delivering hot water. Complex tubing is needed to ensure heat can be applied quickly enough, and they often contain multiple stages that require complex connections. Since tankless heater technology is not as well tested as conventional technology, manufacturers are not able to foresee as many problems.
Whole-house tankless water heaters are rated by how much they can heat a certain volume of water. However, they may have difficulty sending hot water to multiple places at the same time. If the cold water they take in is especially cold during certain times of the year, this difficulty can be magnified. Tanks provide the same heating until their supply is exhausted, making them more predictable.