YOur wall has two pipes. One comes from the water heater and is thus filled with hot water. One is not heated, and because it’s colder underground than above ground, the water pumped to your house will be cooler than the air tempature. Since it takes a very long time for water to absorb enough heat energy to heat up, the water stays cold for a good long time in your home’s pipes too. Your tap simply changes the ratio of how much water comes from the hot pipe, and the cold pipe.
All the way hot closes the cold pipe entirely, all the way cold closes the hot pipe entirely.
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