TLDR: they all do that, it's a safety feature to avoid scalding.
It takes a lot of power to make heat.
You won't get much heat out of a 120V on-demand heater unless you really, really, really restrict water flow, like, you could get a cup of tea out of it if you're patient. Don't even bother with on-demand unless you are willing to run 240V to the heater and at least 20A preferably 30.
An on-demand heater made to run alone on a 15A circuit, is 1440W. It will only embarrass itself and its entire class of heaters. You will be disappointed, swear them off for good, and that will be a shame because they are wonderful when you size them properly.
As others discuss, they have safety controls to prevent outputting scalding water. You should not set your on-demand heater to scalding to avoid legionella, legionella can't grow in an on-demand. You should set your tank heater to kill legionella.