Oil-Filled
Oil-filled heaters come in vented, unvented and radiator styles. However, they are somewhat controversial in regards to health and safety issues because they emit nitrogen oxides and carbon monoxide into indoor air that humans and pets breathe. Unvented heaters are pretty much outlawed in most states. Vented oil-filled heaters are legal in many states, but are somewhat treated as “undesirable.” The U.S. Energy Commission prefers that consumers use vented oil-filled heaters versus unvented models. The Commission also suggests that consumers choose “100 percent outdoor air" units, which circulate fresh air from the outdoors into the combustion chamber instead of the heated air from the room, which would only be exhausted outdoors. Kerosene is the most commonly used type of oil; units are never to be fueled with gasoline. Oil-filled radiator heaters use electricity to heat the oil inside the radiator and are usually portable heaters with wheels so you can roll them from room to room.
Water-Filled
There are two types of water-filled heater styles: baseboards and radiators. Water-filled heaters are a somewhat old-fashioned, but still functional, form of central heating. Unlike a conventional central heating system where warm air is forced through ductwork and vented into rooms, water-filled radiators and baseboards are “fueled” by hot water. The water is heated in the hot water heater and delivered to the radiator or baseboard through pipes. Essentially, a radiator is a vessel that holds the hot water, which is usually heated between 160 and 180 F. And the term "radiator" has nothing to do with radiant heating. Radiators simply emit heat into the room and do not utilize radiant heating principles. Radiator styles include the conventional floor-standing cast iron models to wall-mounted columns made of aluminum panels and convector radiators, which have louvers or fins to heat air that passes behind the radiator.
Similarities
The saying that oil and water don’t mix also applies to heaters. You cannot combine the two to mix as the fuel for a heater; it has to run exclusively on either oil, such as kerosene, or run on water. The only other similarity between oil-filled and water-filled heaters is that you can have a radiator that works with one or the other.
Differences
Oil-filled heaters can be either semipermanent, such as a wall mount unit, or portable, such as an oil-filled radiator heater. And in the case of portable oil-filled heaters, they require electricity to operate. Electricity is only required, and indirectly used, for water-filled heaters that work in conjunction with an electric furnace or electric water heater. The other major difference is that water-filled heaters are permanent structures that provide central heating for the entire home, while oil-filled heaters only heat a room or zone of a home.