The real test of Panasonic's fast lens, small sensor conviction is in the images the LX7 produces. It's a little bit of a catch-22 problem all around. All things equal, larger sensors will capture more detail and have less image noise. Fast lenses will enable you to shoot with shallower depth of field and maintain low ISO settings. In an ideal world, you'd want both, but technology and physics push against you by limiting how much you can get in a certain size. And things aren't always equal (like how sensor size also impacts background blur) so all we can do is test the LX7's particular mix of specifications and let the results speak for themselves.
Note: The photos below have not been post-processed and are copyright to SPH Magazines. They are provided for your reference only and we ask that you do not reproduce them elsewhere. Click for full-resolution versions.
The first question is whether or not the wide apertures of the LX7's 24-90mm f/1.4-2.3 lens will provide us with significant background blur, and the answer seems to be "it depends". Take a look at these lovely ladies to see for yourself.
The wider apertures on the LX7 don't produce as pronounced a background blur as wide apertures on a DSLR. Even when racked out to 90mm at f/2.3 in the last image, we still see a lot of the background in focus. To be fair, the background is relatively near to our subject (how subject and background distances affect background blur is nicely summarized by Yu Jiang Tham). In certain situations where the camera is closer to the subject and the background is far away, we can get a little bit of background blur as in the second image.
The main reason why f/1.4 on the LX7 isn't as bokeh-licious as f/1.4 on a DSLR camera is the LX7's smaller sensor size. Because depth of field is determined by subject magnification on the image sensor as well as the lens aperture, larger and smaller sensors will provide different depth of field values even when the aperture number is the same. In fact, DP Review has estimated that the LX7's lens behaves more like a f/7.1-11.7 lens on a full-frame camera. This is either a blessing or a curse, depending on which side of the aperture fence you're sitting. While you don't enjoy the super shallow depth of field of a bright lens on an FX camera, you do get a deep depth of field with all the speed advantages of a wide aperture.
Where the wide apertures seem to help is in capturing lots of light. Even though the three images above had differing aperture settings, the fast lens allowed the LX7 to shoot at a low ISO setting of ISO 80, capturing images with as much dynamic range and detail as possible with the least amount of noise.
The LX7 shows less image noise compared to the LX5, which is a good thing. Images are relatively clean up to ISO 1600, and you can chance ISO 3200 with loss of detail. Higher ISO sensitivities have too much image noise for us to stomach. The LX7's bright lens helps to keep ISO and thus noise levels down, so you may not have to go that high. Like the LX5, the LX7 can reach up to ISO 12800 at 3MP, but the resulting image is such a mess we wonder why the setting is still there.
The LX7 has a tight minimum focusing distance of 1cm, allowing you to get really close for your macro shots. JPEGs look a tad soft out of camera, and could use a little sharpening in post. If you're into speed, the LX7 shoots at an impressively fast 5 frames per second with continuous AF and 11 fps with AF-S. Like the LX5, the LX7's dynamic range continues to impress - you get to see much more of the scene in the camera than with your standard compact.
Image stabilization has also been another feature in which Panasonic has excelled, the IS on the LX7 is great and will help you steady your shots. Auto-focus is snappy and accurate, another favorite feature on Panasonic cameras. If there's one thing we'd have liked to change about AF on the LX7, it's the ability to map the Fn button to select AF area, regardless of the current AF mode the camera is in. Right now, it will only allow you to manually determine AF points if you're in the One Area AF mode.