it is simply engine coolant diverted by a valve (actuated whenever you turn on your heater) into the heater core, which your blower simply pushes air across to bring heat into the passenger compartment. The coolant is pumped by the already-running water pump in your engine (you might lose an entirely negligible amount of power just from the added resistance of coolant going through the heater coil)
So, bascially all it does it use the heat already in the engine and transfers that to some part which opens up some blower things and toss the heat into your car Nice.
The A/c uses gas though if you wasnt sure of that.