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a heater only heats the water directly around it. if you had it in a large tank and it stopped as soon as the water around it reached the correct temp your tank would not all heat up and the heater would be on, off, on, off, on, off, which is not cost effective and not good for the appliance itself. so the heater stays on for a certain amount of time. in a large tank this time allows all the water to heat to the required temp. in a smaller tank, there is less water to heat so the average temperature tends to get higher. i always buy the larger sizes of heater and i ALWAYS have to set them lower than the temp i require.
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same here