Ideally, lines to individual faucets run out of a manifold serving separate floors, bathrooms etc. that’s what I’ve seen represented on This Old House and the like. I suppose they make them that serves the hole house as a replacement for a tank heater.
They’re supposed to be very efficient, take up a lot less space; hot water on demand for the duration. No heating a tank all the time.
The on-demand water heater and the individual lines are entirely separate issues, as I see it.