Thermostat is a device that keeps the temperature in a water heater at desired level by cutting off power supply once the desired temperature is achieved. Slightly different from the air conditioner thermostat, job of the thermostat in water heaters is to make sure that the water is heated till a particular temperature and there after the water heater needs to shut off. Thermostat keeps checking the temperature and switches the heater on again, once the temperature decreases. The thermostat makes sure that the water is heated till the set temperature.