Kerdi functions the same way as any other surface-applied waterproofing product, in that it keeps any water that penetrates the grout from entering the substrate. How Kerdi is installed on the substrate is different from a liquid waterproofing of course.
The conventional method of building showers which incorporates a liner on the floor and a cement backer on the walls manages water a bit differently. Basically, the tile substrate is allowed to become saturated with water. The management system allows water that doesn't evaporate to make its way to the drain. While it certainly works fine, it does allow water to reside in the system. This residual water is "flushed" out and replaced continuously each time the shower is used.
Either system works, and the conventional system is certainly cheaper, however the newer methods helps manage water more efficiently and allows it to dry it much faster.
For a do-it-yourselfer, a liquid waterproofing may be the easiest and most foolproof method. The only thing you have to be certain of is that the liquid is applied to the proper thickness. Multiple coats properly applied will give you a waterproof shower that will last years.
However, if you want to learn more about the Kerdi system, Harry has several pages on this site about the installation of Kerdi.
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