The point is, if at the tank, the water was say 160-degrees, then you mixed it with enough cold to get 120-degrees out, on that hot water supply line, for every 1-gallon of hot, you might get 1.25-gallons (or more depending on how cold the cold is and the dilution factor) at 120-degrees. You aren't emptying the WH as fast because you are mixing in more cold to the now very hot water. So, effectively, the tank 'looks' bigger. To be safe, you must temper it at the tank, rather than doing it at the shower, since if someone accidentally used all hot, they could get injured quite quickly. The higher the differential between the tank and the room, the faster it will leak heat (i.e., cool off), so your efficency will decrease some, but maybe not as much as adding a second tank which would have much more surface area to dissipate heat. Since you'd be working the tank harder, it may not last as long.