A household furnace is major appliance that is permanently installed to provide heat to an interior space through intermediary fluid movement, which may be air, steam, or hot water. The most common fuel source for modern furnaces in the United States is natural gas, other common fuel sources include LPG (liquefied petroleum gas), fuel oil, coal or wood.
Combustion furnaces always need to be vented to the outside. Traditionally, this was through a chimney with a large fraction of the energy of the fuel lost through the chimney. Modern high-efficiency furnaces can be 98% efficient and operate without a chimney. The small amount of waste gas and heat are mechanically ventillated through a small tube through the side of the house.
Modern household furnaces are classified as condensing or non-condensing based on their efficiency in extracting heat from the exhaust gasses. Furnaces with efficiencies greater than approximately 89% extract so much heat from the exhaust that water vapor in the exhaust condenses. Such furnaces must be designed to avoid the corrosion that this (highly acidic) condensate might cause. However, if you avoid the common mistakes, condensing furnaces typically can deliver heating savings of 20%-35% assuming the old furnace was in the 60% Annual Fuel Utilization Efficiency (AFUE) range.
The heat is transferred from the furnace through an intermediary distribution system. If the distribution is through hot water (or other fluid) or through steam, then the furnace more commonly termed a boiler.
Most modern furnace installations in the United States used forced-air heat, where ductwork carries air through the heat exchanger of the furnace, whence it is blown throughout the building. One major advantage of this type of system is that it enables easy installation of central air conditioning.
In such an air (convection) distribution system, a cold air return feeds the cooler incoming air into the heating chamber, where it passes into a plenum, or chamber, from which it goes into the ductwork to various parts of the building.
Air convection heating systems have been in use for over a century, but the older systems relied on a passive air circulation system where the greater density of cooler air caused it to sink into the furnace, and the lesser density of the warmed air caused it to rise in the ductwork, the two forces acting together to drive air circulation in a system termed "gravity-feed".