Direct vented oil-fired water heaters are used when their isn’t enough air supplied to the burner. The additional venting kit is connected directly to the burner, to the outside air supply. Pictured below is a Bock 32e oil-fired water heater, with a direct vent kit attached to the burner, piped to the outside wall. Direct vented water heaters are required in homes without enough air supplied to the area naturally, which happens when homeowners convert basements into livable spaces and enclose the utility room areas. Direct vented water heaters are also found in homes or business where the air is contaminated with something like dryer lint, dust from a wood working workshop, or harsh chemicals in the air from beauty salon or some manufacturing facilities.
Below is a normally vented oil-fired water heater. Without a direct vent air supply kit.