I AM INSTALLING A NEW WATER HEATER. THE OLD WATER HEATER HAS A PIPE EXTENDING FROM THE DRAINAGE PIPE. DOES THIS PIPE NEED TO BE CONNECTED TO THE NEW WATER HEATER?
Normally, a pipe attached to the water heater drain pipe is a recirculation line. While not absolutely necessary, a recirculation line keeps water in the pipe hot and reduces the amount of water wasted before you get hot water. The pipe could also be for a pressure relief line. If it goes to a floor drain, then it is a pressure relief line.