Ok .. this is starting to make a bit more sense .. but What happens when the ambient outside air is cold, as in winter?
Let's assume the water in my geyser (which is insulated, and situated in a roof space that is warmer than the ambient outside temperatures) is at 20C, and the outside temperature is much lower, say for example 10C.
How does the heat pump extract heat out of cold outside air, and transfer that extracted heat, and heat it up to higher than the existing geyser temp of 20C?
A heatpump is very similar to a deep freeze in reverse. The compressor extracts heat from the food in the freezer, and releases it in the coil at the back of the fridge (feel it, it is hot). So just imagine your freezer compartment as the cold part of the heatpump in the ceiling/outside and the hot freezer coil as the coil inside the heatpump that is heating your water. Even when your freezer is at -15C, it can still remove more heat from the food and chill it further. So even if the outside temp is below freezing, the heatpump can still extract heat from the air and transfer it to your hot water. The efficiency is dependent on outside temperature, so the warmer is is outside, the less energy and time it takes for the heatpump to heat your water.
Temperature is just molecules vibrating, so it doesn't matter if the outside temp is less than the water temp. The heatpump can still extract energy from those vibrating molecules (they just vibrate less..) Only living things experience temperature as "hot" or "cold".
A deep freeze is like 150 Watts, while a heatpump is 1000W or more so it works much quicker than a deep freeze.
An air conditioner, on the other hand, can operate in both modes. To cool, it is like a fridge, extracting heat from the room and sending it to the hot coils outside your house. To warm your room, it acts very much like the hot water heat pump, extracting energy (heat) from the air outside and sending it into your room.
The reason a heatpump saves electricity, compared to an electic element geyser, is because all the energy is used to run the compressor only, which is compressing the refridgerant liquid. It is not doing any work to actually "heat up" the water. The heat comes from the air. With a geyser, all the energy is used to heat up the element, which then heats the water. This is how you get a 3kw heating capability, from just 1kw of electricity. An aircon is also efficient like this.