Location of expansion tank w.r.t. water heater

I'm working on plans for switching to a tankless system and I'm pretty sure I will need an expansion tank due to the city water meter likely having a back flow preventer. (I couldn't get a straight answer from the water company!)

I'm trying to understand why I've read in several places that the expansion tank needs to be as close to the heat source as possible. Here's my thinking as to why this isn't necessarily true:

When the tap is open the heater is on, water is flowing - there is no pressure build up issue because the open tap provides an outlet. When the tap closes, flow stops and expansion (or contraction for that matter) occurs. Since the water isn't flowing the pressure build up is static in nature - it presses on the faucet at the end of the line and on the HWH equally. Why then would the expansion tank need to be right next to the heat source? Water is not that compressible ;-)

The reason I poke at this is because I may install my tankless on the exterior of my house - direct vent, and may want to install the expansion tank elsewhere for simplicity & cleanliness.

Thank for your help!
Regards,
Jonathan

Does anyone have a thought on this? I'm surprised no one has offered an opinion!

The expansion tank can be located any where on the cold water line between the PRV / check valve and heater.

It is just commonly located above heater for easy access.

You just go ahead and install it on the cold supply side of the Tankless unit, just as you would a tanked unit.