In my Sunline I had two valves that looked like the photo. Each valve directed the water either straight through to the the heater (no by pass) or to the bypass pipe isolating the heater for winterizing. Not intended to mix water.
Make sure they are both fully open to straight through position so no water is directed to the by pass pipe for hot water. The lever is the direction of flow so horizontal is to the heater, vertical is bypass
I have three on/off valves now in the Rockwood. After winterizing for the first time last winter, I opened the valves for flushing this season. My first trip was in 40 degree weather and my water heater wasn't working. Cold showers! On the last day I checked and found I left the third valve open on the by pass pipe allowing the water to by pass the heater.
2012 F150 F/X 4, 6cyl EcoBoost with Max tow pkg
2013 Rockwood 8280WS 5th wheel
2006 Sunline T1950
2004 T@B T-16