[Uhehner]

Your water heater has two sections, the domestic section with fresh water from your water tank and the antifreeze heat exchanger section connected to your engine. The electric heater element is submerged in the domestic water side only.
If the water heater is not leaking, the valves would be open to have hot engine antifreeze circulate through the tanks heat exchanger and heat the domestic water without using electric. You would only need to use electric heat if the engines and the domestic water were cold. Should the water heater fail for what ever reason, you would close the valves so as to isolate it and  not lose engine coolant. Never operate the electric without having the domestic water section full or you will burn out the heater element.  Capt. George