[corresation]

There is no reason why I heat the water in the tank up throughout the night

Aside from the fact that you need the water to remain above a certain level or the water can become dangerous (e.g. legionella), what happens the night you play glow in the dark flag football and decide to take a shower? Or do a load of dishes? Etc.

The Nest "works" (in the absolutely marginal way that it does so) because it makes a middling difference. That would be a stark difference with a hot water tank.

[dfc]

What happens the night i stay up late with the nest and want the heat turned up?

My dishwasher contains a heating element and so does the clothes washer.

[corresation]

What happens the night i stay up late with the nest and want the heat turned up?

Put on a sweater? But yes, what you describe is exactly how many people with Nest thermostats end up disabling the "intelligent" functions.