Water Heater Sizing Basics
For a tank water heater, size means gallons of hot water the tank holds. For a tankless, size means gallons per minute (GPM) the unit can heat on demand.
Both numbers matter for the same reason: peak demand. When two showers run plus a dishwasher, can your water heater keep up?
For tank: count your "first hour rating" (the gallons the tank can deliver in the first hour, including what's preheated plus what it can heat fresh during the hour).
For tankless: count your peak simultaneous flow. Two showers running at 2 GPM each plus a kitchen sink at 1 GPM = 5 GPM peak demand.