Posted By: wavyIf you want more energy (for water heating or to counteract fabric losses) the extra air (containing energy) has to come from somewhere else.
Does that make sense?

It is how I understand it. A house has a number of thermal energy generators in it, cookers, kettles, TVs, washing machines etc, as well as people, these all add a bit of heat, when the cooler air is drawn into the house, it mixes with the interior air and slighty reduces the temperature (note temperature not heat/energy). This eventually gets passed the the recovery unit which, in effect creates a smaller volume of air at a higher temperature (it may put the energy into water, does not matter as far as the physics is concerned), this is then redistributed around the house (or in a bath) and the cycle starts again. Sometimes there will not be enough thermal energy to keep the house at the desired temperature, so the electric heater kicks in and boosts it up.
Worth remembering that most of the year there is not that many cold times but plenty that are hot enough. This may seem odd but we know that a house seems to stay a couple or 3 degrees above the ambient. Here it is currently 17°C outside and 21°C inside, cloudy and grey with a bit of drizzle so not a huge amount of solar gain today. Most of this temperature difference is coming from my fridge and PC, with the occasional bit from the kettle and me. My energy meter is currently showing 170W, apart from the router that is in the other room, all that is in the kitchen, so say I contribute another 100W, I am heating this room with a 270W heat source for a 4°C temperature difference.