Your dealer is describing how a sidearm works, not a plate exchanger. A plate exchanger will not "thermo-siphon." The "instant hot" water is a set up where a plate exchanger is installed after your hot water tank. In this situation your tank would HAVE to be turned off. You can also install your plate exchanger BEFORE your tank and your tank basically will store hot water after it is heated by the exchanger. In any of these cases, your tank CAN be turned off.
I, and most other guys with a plate exchanger, have ours set up before the water heater. Some guys leave their tank on, but at a lower temp setting, as a backup. You will have unlimited hot water in this situation. There are already several topics on this matter. Do a search for "plate exchanger vs. side arm" and you'll get the low down on all the various opinions.