Seanc, I'm not an expert, but based on what I've read so far, I think it's to "blend" the hot and cold water to keep the water entering the heating element from being too cool to reduce unnecessary condensing.
At least that's what I've taken away from what I've been reading - no guarantees - lol.
I haven't learned nearly enough about all this stuff so probably best to wait for one of the experts to chime in. These guys seem to know a heck of a lot more about this than I do. I honestly thought it was gonna be a slam dunk to install mine but, after reading several of these threads here on GJ, I'm dang near inclined to hire it done so it gets done right! The more I read, the more questions I have - lol.
I will be watching for others to replpy to your question so we can both learn - lol.
Good luck on yours!