Single diverter valve system. The picture shows diverted, water will bypass the tank. Water usually flows in the direction of the valve handle when you think of it as an arrow.
Not my video, but it came up on google and I think describes it well. Something it doesn't mention is I think there is some kind of check valve on the hot water outlet side of the water heater tank that prevents water/antifreeze from flowing into the tank at that point.
https://youtu.be/kZpCz5bu6Xw?si=tFhPM3vozG6agwPA&t=51
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