The by-products of combustion must not be allowed to accumulate inside a dwelling area. The removal of these by-products must not endanger or damage the dwelling area or fail to replace the oxygen supply used in the process. A properly planned and installed venting system will satisfy these requirements:
The key is to route all combustion products to the outside atmosphere.

Prevent fire hazards due to overheating of nearby walls and framing (combustibles).
Constant high temperatures can dry out and greatly reduce the ignition temperatures of combustible materials near venting fixtures. If the ignition temperature is reached, even without the presence of flame, the material will begin to burn. Venting systems are designed, tested, and listed to prevent ignition of nearby combustibles when they are installed properly. The minimum distance they may be safely placed away from combustibles (known as clearance to combustibles) is specified by the venting manufacturer and must be followed carefully to insure safety. Close clearances to combustibles are achieved by design factors such as intervening air spaces and dilution of flue gases (and reduction of their temperatures) by the draft hood. NOTE: Always follow the venting manufacturer’s clearances.

Prevent damage from condensation of water vapor in the flue gases to the appliance, vent, building, and furnishings .
Burning 100 cubic feet of natural gas produces about 200 cubic feet of water vapor. Condensation occurs when flue gases are cool enough to reach their dew point (the temperature at which water vapor becomes liquid). Condensed water vapor can cause problems in the house, the appliance, and the venting system.

Provide adequate oxygen supply for the appliance and occupants of the home .
There must be adequate amounts of oxygen available to replace combustion, excess, and dilution air. Incomplete combustion and the threat of danger to occupants of a dwelling can result from inadequate supplies of fresh air. The size and use of the area supported by the appliance, as well as the tightness of house construction, are factors that must be considered.

When planning an installation, or performing service work in the field, please keep in mind that there are many causes of negative pressure in a home, including vented appliances such as forced air furnaces, hot water tanks, clothes dryers, bathroom fans, and kitchen fans.

What is a Direct-vent heater?
Direct-vent gas appliances are sealed systems that obtain intake air (or combustion air) from outdoors, and return the exhaust to the outdoors, often through one co-axial pipe. These heaters are generally more efficient, and less draft sensitive, than traditional up-vent (or B-vent) appliances.