Hi Jim, Nice looking putt putt boat and engine you have there!
I imagine it is very relaxing to putt around the lake in it.
As for the steam boat toy, It looks to me like the steam heats the shrink tube until it is fully constricted. This is followed by build up of vapor pressure until it forces the shrink tube open which gives a quick and short boil and a blast of steam. In my estimation it is not a very good propulsion system yet still fun to play with and good for amusement.
Thanks for sharing it here!
Gil