The GMF designation means a "fresh water cooled" GM model. As others have said, there is coolant in the closed system engine block that re-circulates through a heat exchanger .. just as in most automobiles.. The radiator in a car is the heat exchanger where the coolant rejects heat to the air passing through.. In the little Yanmar, the heat exchanger rejects heat to the "raw" water that is passing through. The raw water side is a once thru system .. The elastomer impeller pump pulls in the raw water from outside the boat and pumps it thriough the heat exchanger where it picks up heat from the "fresh" coolant water in the block. It does not mix with that block system, just as the coolant in your car does not (normally) mix with the air flowing through the radiator. The raw water (seawater or lake water) then leaves the heat exchanger and gets mixed into the exhaust gas stream in the elbow which cools and quietens the exhaust. It goes overboard then and is what you hear splashing from the exhaust exit.