What is a direct contact water heater?

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from the 1st Google result:

With Direct Contact Water Heaters, incoming water flows downward through a vertical column filled with stainless steel packing rings. As cold water comes into Direct Contact with rising hot combustion air from a gas burner, a very rapid heat transfer occurs, absorbing 99% of the heat energy into the water. Pure, heated water then accumulates in the storage tank for “On Demand” use, and clean CO2 and H20 combustion gas leaves the stack at near ambient temperature.