The race to make the most capable camera in the smallest possible package is a death-match of features versus size. Panasonic has a notable new gladiator in the LX100, which combines a large(ish) micro-four-thirds sensor with 4K video and a lens to be reckoned with.
The LX100 is a palm-sized and utterly gorgeous 12.8 megapixel camera with fixed 24-75 (equivalent) f/1.7-2.8 optically stabilized lens. Mark this as the first fixed-lens camera to hold a micro-four-thirds sensor, the same sensor found in the terrific Panasonic GX7. That will give you top-notch stills that rival mid-range DSLRs in clarity and color, as well as great low light performance.
In concert with the great sensor is a unique lens which is a marvel of engineering in its own right. When we were briefed on the camera, Panasonic touted the insane level of precision in its manufacturing process, which apparently allows the lens to deliver maximum resolution while suppressing distortion and chromatic aberrations. Its unique construction allows every lens element to move, which makes its small size possible.
Another impressive feature of the LX100 is that it shoots 4K video at 30 or 24 frames per second. It will be interesting to see how the video signal stacks up to the quality of Panasonic's GH4, which produced stellar results, but had a much beefier body to accommodate the processing of all that data. But the LX100 does have the same Venus engine as the GH4, so there's reason to hope that it will look just as good. The Venus engine also allows for a speedy 11 fps burst rate when taking stills.
On the outside of the LX100 you'll find a 3-inch LCD and a 2.7-million dot electronic viewfinder. The LCD doesn't flip out and rotate, which might be a sticking point for video shooters especially. There are plenty of buttons and dials for those seeking manual control. Some of them even have an analog feel, like the shutter speed dial which mimics old-school cameras the same way Fujifilm's X-series bodies do. I find these dials unnecessarily cumbersome, but many love them. On the top you'll find a hot-shoe, but no internal flash. The LX100 is actually bundled with an external flash that you can attach at will.
We don't usually pay too much attention to added software features, but Panasonic has included a new one here called 4K Photo, which sounded maybe, possibly, useful. Basically you can record a 4K video clip, then extract 8 megapixel stills from the clip using the sensor's full color gamut. That means that the stills won't look as crappy as video grabs usually do. They'll actually look like high quality photos, and since you are pulling them from a video clip, it's basically like having a 30 fps burst mode. Kinda neat.
Almost every spec on the LX100 puts it ahead of the current king of high-end fixed lens compacts, the Sony RX100 Mark III. The Sony has a smaller one-inch sensor and its lens has slightly less range and brightness at 24-70mm f/1.8-2.8. The big catch when comparing the two is that the LX100 is a great deal larger, definitely too big for a pocket. You can't really call a camera like that compact, which may defeat the purpose altogether. Why not just get a more capable camera with interchangeable lenses if you aren't saving that much space? In this regard, you might compare the LX100 to Canon's G1X, which houses a 1.5 inch sensor, slightly larger than micro-four-thirds.
The LX100 is also a searing $900. Ouch. You might justify the cost by pointing out that you'll never have to invest in another lens, which can cost up to $1000 by themselves. But for a pro or enthusiast who's looking for a small carry-along companion camera, $900 still seems like a lot. But if you can look past the price, Panasonic may have put something special together here.