Boilers heat water until it turns to steam.
Factories and power plants use boilers to generate steam. The hot water boilers many people use to heat their homes are a little different. Here, the main goal is not so much to generate steam but to heat water and transport that heat throughout the house. Although there are different types of boilers you can buy, the basic principles are fairly simple and much the same in all of them.
Fuel
Boilers burn fuel to generate heat. Typically the fuel is either coal, natural gas or oil. Some boilers rely on electricity to heat the water instead; these are called electric boilers. The fuel enters the boiler in the firebox, where the heat from the flame is transferred to the metal coils of a heat exchanger. Cool water enters at the bottom of the coil and rises toward the top, growing hotter as it does so.
Home Boilers
In a home, the hot water travels from the boiler through radiators in the rooms of the house. Heat transferred from the radiator coils warms the surrounding air, creating convection currents that circulate heat through the room more rapidly. The cool water leaves the radiator coils and travels back through a circulation pump, which returns it back to the boiler firebox and heat exchanger for reheating. Boilers like these are not actually generating substantial quantities of steam -- just hot water for household use.
Types
You can purchase other kinds of hot water boilers that incorporate some additional features. Condensing boilers, for example, recapture heat from water in the exhaust generated by the burning fuel and thereby achieve higher efficiencies. Combi boilers combine the hot water heating system and the home heating all in one tank, so that the same system supplies hot water and central heating. Combi boilers may or may not be more efficient than conventional systems, depending on how the system is designed.
Considerations
The main alternative to a hot water boiler in many cases is a furnace, which is similar in many respects. The key difference, of course, is that the heat exchanger in a furnace transfers heat directly to the air and uses air to convey heat throughout the house. That's why furnaces have ducts rather than pipes. Boilers can be more expensive to install and maintain, but they also provide more even heating and often operate more quietly as well.