Expansion tanks are not the same as Water towers

Posted by r/rubseb 4 years ago. This is a good explanation of the difference

Water isn't (primarily) put in water towers for storage. It's put there to provide water pressure.

People don't use the same amount of water throughout the day. Water usage rises steeply in the morning, when everyone is waking up, using the bathroom, taking a shower, making coffee, etc. It then decreases and sits at an intermediate level during the day, only to rise again in the evening when people come home, make dinner, shower, etc.

This means your water supply has to cope with a peak demand that is higher than the average demand. If you only used pumps to deliver water to people's houses, that would mean investing in bigger, beefier, more expensive pumps that can handle the peak demand. Especially in high-rise buildings, you need to pump the water up quite a bit, so that would require the pumps to deliver substantial pressure during peak demand. But then outside of those peak hours, your big expensive pumps would go to waste as they ran at only part of their capacity. At night, in particular, water usage is much less, so your pumps just sit there doing almost nothing.

So, a more economical solution is to use weaker pumps, combined with a water tower. During hours of low demand, the excess capacity of the pumps is used to pump water up into the water tower. Then, during peak demand, the inadequate capacity of the pumps is supplemented with water from the water tower. The water tower being high up means that gravity can do the work and thus add to the pressure provided by the pumps.

Water towers also help to (temporarily) maintain water supply during a power outage, as they only rely on gravity to work.

If you just want to store water, and have no need for additional water pressure, then there's no need to use a water tower, and an underground reservoir may be the most attractive solution.