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The method that utilizes a water heating coil surrounded by boiler water is known as the Direct Boiler System. In this system, water is heated directly by the boiler's heating elements or coils. The hot water from the boiler is circulated through these coils, transferring heat directly to the domestic water contained within them. This allows for efficient heating, as the domestic water can be warmed quickly and effectively by the surrounding boiler water.

In contrast, other methods, such as the Indirect Boiler System, involve a heat exchanger that uses boiler water to heat a separate storage tank of domestic water; this does not involve direct contact between the two bodies of water. The Thermal Storage System typically stores heat for later use, which can involve various configurations and does not specifically describe the direct heating method involving coils. The Hybrid System combines various heating methods, which may not necessarily include a coil setup as described in the question. Thus, the Direct Boiler System stands out as the option that matches the described method perfectly.