There is a line T-ing off of the DRAIN line at the bottom of my water heater and I don't know what it is for. It is UPSTREAM of the valve that I need to open annually to remove sediment from the water heater. Does that mean that it is full of (hot) water under pressure? The water heater is located in the ground floor garage,. It feeds only my home, which occupies the top 2 stories of a 4 story townhouse/condominium. This line T's off from the drain line and is insulated up to the ceiling of the water heater closet (where it disappears from view...) Any ideas what it might be for would be appreciated. Thanks!
Most Likely - the return line of a hot water recirculation loop. ie, "instant hot water" by means of a circulating pump which pulls hot water from the hot line and returns it to the hot water heater through this tee on the drain line, after running it through the supply lines to your faucets. Given your location 2 (3?) stories above the heater this seems very likely (no guarantee that it's working, but the system was installed at some point, anyway.)
So yes, it's full of hot water under pressure. Sounds like decent workmanship if it's fully insulated.
If you do not have a long wait for hot water, it's probably functioning.