The on-demand water heater and the individual lines are entirely separate issues, as I see it.
Can be. But some houses have recirculating valves on the hot water lines so hot water comes out when you turn the handle, no waiting for it to make its way through the line. Obviously something that would be of benefit with a tank heater but wasteful for a tankless.
Don’t ask me how they plumb it, all I know is when my folks built a house backin the early 60’s, mom wanted hot water when she called for it and that how they plumbed it. And I’ve seen and heard of it in other houses.