Gas tank type water heaters work pretty much like heating water in a pot on a stove in the illustration above you can see the flames from the burner at the bottom of the tank. The gas to the burner is controlled by the thermostat gas control valve seen on the left when the water gets cool at the bottom of the tank the gas control valve opens the gas to the burners and the water heats in till the desired temperature. When the desired temperature is reached the gas shuts off.
The Flue Pipe is the pipe coming from the center of the burner, it's job is to exhaust the products of combustion to the outside. It is very important that the water heater is properly vented meaning the flue pipe is extended to the roof without any leaks in the flue pipe, many people die every year of carbon monoxide posing the silent killer.
The Cold Water Inlet pipe is on the top right which allows cold water to enter the heater, notice attached below the cold water inlet is the dip tube this directs the cold water to the bottom of the tank pushing the hot water to the top of the tank and out the hot water outlet on the top left of the tank.
The Temperature Relief valve is located Just below the hot water outlet on the left hand side or TPR for short it's job is to relieve the pressure in the tank to prevent explosions in case the pressure gets to great (150 lbs) it will also open up if the temperature exceeds 200 degrees and allow the heater to cool down. When the TPR opens up it expels lots of very hot water it is important that the TPR has a pipe directing the water to a safe place typically the pipe should be approximately 12 inches off the ground or garage floor.
The Anode Rod is a solid pipe made of aluminum or magnesium and prevents the tank from deteriorating. Most water heater tanks are made of steel when the tank is filled with water a electrolytic process begins, the anode protects the tank by being a better electrolytic conductor thus giving of itself to protect the tank. Eventually the anode will be consumed leaving the electrolytic process to deteriorate the tank. find out more about his in maintenance
The Drain Valve is just that the valve to drain the heater during maintenance and repairs
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