The difference between the two may not make any difference to us the end user. But, it makes a big difference to how the unit is constructed.
There are various types of outdoor furnaces and outdoor boilers on the market today. Some burn coal or wood pellets. Most burn wood. And there are some models that are combination fuel units that burn wood and oil. (Or some combination of fuels)
The beauty of these units are that they can heat an entire home of large or small size as well as commercial buildings. They will also supply all your domestic hot water needs.
The furnace itself is a factory pre-built unit. It looks like a shed that you would have elsewhere on your property. They come in all sizes and colors to match your homes exterior.
Here's how they work. For this example we will be using wood logs as our fuel source.
In most cases the furnace will have an area above the firebox that holds water, and this can be several hundred gallons depending on the size of the unit. Below the water area is firebox where the logs are placed.
When the fire is lit the heat from the fire is transferred to the water above. Depending on the manufacture of the furnace this can be achieved in several different manners. The first and most common, is through conduction and or convection air currents. This is where the heat from the fire is transferred to the metal above where the water is stored. This method employs the first few rules of thermal dynamics.
Another way is through the use of "tubes". Although the use of tubes usually implies a boiler. But not always, remember what I said earlier, if it is not a closed system then it is not a boiler! Anyway, moving on.
The tube style works like so. There are a series of tubes that will run the length of the unit. The tubes are open on the firebox end and on the other end they are open leading to the flue pipe or chimney. The water surrounds the tubes. (Of course this sealed so the water won't leak out) When the fire is lit, the heat from the fire (or more appropriately called exhaust gases given off by the fire) pass through the tubes. In doing so the heat is transferred through the tubes into the water. This type of an arrangement is referred to as a fire tube furnace or boiler.
I prefer a unit without tubes simply because you do not have to clean out the tubes. Over time the ash from the fire will collect in the tubes, and if this is not cleaned out it will have an insulating effect, thus losing efficiency
Whatever system your furnace uses the rest of the operation is pretty much the same in theory.
After the water is heated, it is then pumped into your homes furnace or boiler. First we will talk about the boiler method.
For example, you have a forced hot water unit with say 2 zones. (Oil or gas fired) All you need to make this work is a water-to-water heat exchanger. This is a unit that has four pipes on it. Two of the pipes are for water coming in, and the other two are for water going out. This is very simple technology. (A heat exchanger is a device that allows the exchange of heat from one system to another, without the two systems ever coming in contact with each other. In other words, in our example we have the water from the outdoor furnace and the water from your inside heater. When they pass through the exchanger the water from one system will never mix with the water from other system. Just the heat from one system is transferred to the other.)
Here's how it works. The outdoor furnace has a circulator pump attached to it. There is a supply line and a return line. The supply line leaves the outdoor furnace and is plumbed to one side of the water-to-water heat exchanger. (Sometimes referred to as a "plate exchanger") Once in the exchanger, the water passes through the plates and then flows out through the return line back to the outdoor furnace. (A continuous loop of water flow) In the process the heat is exchanged to the indoor boilers water.
The indoor boiler is plumbed just like the outdoor furnace. You simply add another circulator pump, just like you were adding a new zone. Only you are not adding any baseboard. The pump will continually circulate the boiler water through the other side of the water- to- water exchanger, thus always keeping the inside boiler water temperature hot. Usually at around 185 degrees Fahrenheit.
Heres how the system operates. The outdoor furnace (in most cases) has a device used to measure water temperature. (Called an aquastat) When the water temperature drops below the set point, usually 175 degrees F, the aquastat will tell the outdoor furnace to fire up! In most cases this is done by an electric solenoid that will open a damper that is located on the front door of the furnace. This will allow air to enter the firebox, and the fire will come to life. In some cases you can add a fan to the front of the door to speed up combustion and cut down on the smoke output. I have one installed on mine.
When the water inside has reached its high temperature set point determined by the aquastat, (somewhere in the range of 185 degrees F,) it will de-energize the damper solenoid (and fan) closing the damper and not allowing anymore outside air into the firebox. The result is a very slow smoldering fire. This process is repeated whenever the water temperature falls below its set point.
Now let's say your home is heated with a forced warm air furnace, therefore you have no boiler inside like the example above.
Everything is the same except that you use a different type of heat exchanger. What you need is called a "water-to-air" exchanger.
It works the same way as the water-to-water exchange but in this case you have the water running thru it and a fan below it. The exchanger is placed inside or next to you furnace (Installation may vary depending upon your needs or current installation)
When you house calls for heat, it will turn the fan on and blow air across the exchanger coil. The hot water from the outside furnace is circulated through the coil and gives up its heat in the form of warm air! Pretty cool.
There are many ways to configure this type of system. There are exchangers built to connect to your current hot water heater. As well as free standing coils to heat your garage.