Short answer: Both.
As someone who lived with a rationed water supply for many years, i’m no stranger to water tanks. As water shortages intensified, water tanks became a common sight. That led me to think: Water tanks fill whenever the water supply is turned back on, and seamlessly take over and provide running water when it’s turned back off.
This is very convenient and helpful if you’re conserving water, but it detracts from the benefit of rationing. Rationing is supposed to prevent you from getting water at certain times so that the reserves (usually a dam) don’t run out. The problem that water tanks introduce is: They simply take longer to fill up when water is being rationed, so they may end up taking just as much water from dwindling reservoirs.
On the other hand, tanks could be considered a (one-way) extension of municipal water reservoirs. They are privately owned and won’t contribute water back to the water supply. However, this is helpful if municipal dams are not large enough to collect the water necessary to supply everyone.