Both Olympus TG-870 and Panasonic GF7 have 16.0 MP resolution sensors but Olympus TG-870's sensor is 1/2.3" (6.17 x 4.55 mm ) and Panasonic GF7's sensor is Four Thirds (17.3 x 13 mm ).
Since Panasonic GF7's has a larger sensor area with the same resolution, this means that it also has a larger pixel area hence better light collecting capacity for a given aperture compared to Olympus TG-870.
Below you can see the TG-870 and GF7 sensor size comparison.
As seen above, Panasonic GF7 has a 8.0x Larger sensor area than Olympus TG-870. Larger sensors give photographer more control on the depth of field and blurry background compared to smaller sensor when shot in same focal length and aperture.