Condensing vs non-condensing (gas)
A condensing gas water heater extracts extra heat from its exhaust until water vapor condenses, reaching UEF ratings around 0.9+; a non-condensing unit vents that heat outdoors. Condensing units need a condensate drain and can use PVC venting.
The efficiency difference is roughly 10–15% on gas use. Condensing exhaust is cool enough for plastic vent pipe, which often simplifies venting; the acidic condensate requires a drain and sometimes a neutralizer cartridge.
Essentially all ENERGY STAR certified gas tankless units are condensing designs — the certification threshold is hard to meet without condensing heat recovery.