It heats inside the washlet not via your hot water heater. After the misses popped out some humans she got hemmeroids it is very nice for that as well. Our Toto has a built in dryer but yes you can still use paper to finish the dry, you will use less toilet paper for sure and be cleaner.
Incidentally ours also has a heated seat and it raises the lid as one approaches. I do have to press a button to raise the lower part for 立ち小便。