Yes, the hot water heater employs feedback control.  Two controllers are described in the following.

1. Temperature Control - The heater's reservoir is maintained near a set temperature by one feedback control loop.  This is usually an on/off control that maintains the temperature of the hot water by adjusting the heating source, either gas combustion or electrical heating element.

2. Level Control - The fluid level is maintained by another feedback control loop that adjust the flow of cold "make-up" water to the tank. 

When hot water is used, the level goes down.  The system then adds new cold water to maintain the level near its desired value.  The addition of cold water lowers the tank water temperature, and the temperature controller activates the heating source.