So, thanks to you, I think I've now got my thinking straight about this, and do now understand 'how it works'.
Phew, got there atlas.
However, I'm still inclined to stick with what I most recently wrote - namely that I don't really see what advantage this external heater offers over having an immersion within the main tank at the same height (above base of cylinder) as the external one - do you?
OK... The difference/advantage is that, your usual immersion heater, to some extent, due to circulation, is trying to some degree, to heat all the water, above the bottom of the element. You get little choice on this, it's all, or none. Immersion elements have limited lengths, and only the water above the bottom of the element will be heated.
The Willis, can heat a very limited amount, with the hot water all concentrated just at the very top of the main cylinder. You have the choice of anywhere between a little, or a lot. The Willis is also able to heat all of the water in the main cylinder down to where the Willis cold connection joins the main cylinder at the bottom. That would add perhaps an extra third to my stored hot water capacity, over the existing amount...
At the moment I normally use my gas boiler, which heats much more water in the cylinder, and of course is cheaper to run, than does the immersion heater in the same cylinder, because the boilers coils, are located below the end of the immersion element.
