While Sylvan gives good reasons for the economy of a point-of-use water heater, there are IMO considerable downsides to their use.
1. While the shower has its own source, what does one do about the other fixtures? Do they each have their own point-of-use heaters? Are they by supplied by a central water heater – if so, why bother with the point-of-use unit other than to have one supply tube going to it?
Unless the electricity is produced by a dam or atomic energy, the electricity is produced by burning a fuel. the line losses transmitting the electricity are high; so most electric rates are 3 times the cost of providing the heating by burning fuels in the home. Cutting the electric bill in half by making the electric usage more efficient still makes electricity more expensive.
The typical family bill for gas or oil hot water is $250 per year. The typical electric bill for the same hot water use is $800 per year. Cutting the electric bill in half still makes it $150 per year more expensive – and the cost of installation of the point-of-use electric heater is very high.
These are reasons central, fuel-fired water heaters are still preferred in the majority. Only one, long-lasting appliance required. When an instantaneous unit is used for the whole house, the small tubes lime up in many areas and a small flow from only one tap of less than 1/2 gpm makes the unit hunt. A point-of-use heater at a sink for coffee or a small sinkful does make sense, small quantities make for small bills. Showers and washers make for large bills.