Tankless water heaters take up much less space than a conventional water heater because there is no longer a requirement to store water for it to be heated. The tankless system connects directly to the plumbing of the home. Water cycles through the unit, providing hot water on-demand. That makes it one of the most convenient options available today for homes that are in higher demand of hot water.

Pros:
Provides immediate, unlimited hot water when used at directed
Can be installed in very small areas
Energy efficient (may even qualify for a tax credit)
When maintained properly, can have a longer life then a conventional water heater

Con:
Higher initial cost for the unit (softener is recommended)
Can have inconsistent temps/pressures depending on how many fixtures you are running at one time
Annual maintenance needs to be done to descale the heat exchanger