ShaheedG,
Welcome. Mike did a good job explaining here, but let me also throw in a few tidbits.
Previous 35mm film cameras used a 3/2 ratio of 36mm x 24mm film. This was effectively the 'sensor size' of 35mm cameras, as the film was the sensor. When they started replacing the film with light sensors several years back, instead of using a 36 mm x 24mm sensor they went with something smaller - why, I am not sure, but it may have had something to do with cost.
What the smaller sensors effectively did was not use the full area captured by the lens, instead only using the center area. This effectively has a zooming effect.
What does this mean to photographers?
- If you like wide angle lenses and photos, you are unfortunately losing a lot. These small sensor cameras come with lens factor values to let you know the 'zoom' effect (I forget the official term). Canon's sensors are 1.5 and Nikon's about 1.6. This means that with Canon, if you had a 24mm lens, it is now the equivalent of a 36mm.
- If you are a wildlife or sports photographer, you may love the zoom effect. You can now reach out a lot farther w/o having to buy very expensive lenses!
- The center of the image is always superior in quality than the sides. Some bad lenses have a lot of light dropoff in the corners, for example, and it is usually sharper in the middle. Since the smaller sensors only use the middle area with normal lenses (more on that below), you are effectively getting the 'sweet spot' all the time - a plus.
- Manufacturers are now producing lenses that do not even produce a light area that exceeds the smaller sensors' area. This is cheaper for them. What does it mean? Not much if you use the smaller sensor cameras. But if you try using these new lenses on an older 35mm camera or on a full-frame sensor camera, you will not get the entire viewfinder area in your pix (!!!). So these lenses are only for C sensor cameras.
That's about it. I have a Nikon D200 with smaller sensor, and personally I don't like losing my wide anglesBut I do a lot of landscape work. Thinking about getting a Nikon D700 FF camera these days........
G