A flue, simply, is a tube that passes from the combustion chamber of a water heater to its draft diverter. It does two things: it carries the exhaust gases to the vent and out, and it transfers the heat thus created to the water. We don't have too many examples to show you because flues are inside a tank.

The photo shows a simple 20-gallon water heater. Bear in mind that rapid-recovery commercial water heaters can have anything from three to a couple dozen flues inside. Typically, the exhaust gases are gathered to the draft diverter and vent by an inner cover.