Both Panasonic GX85 and Panasonic SZ1 have 16.0 MP resolution sensors but Panasonic GX85's sensor is Four Thirds (17.3 x 13 mm ) and Panasonic SZ1's sensor is 1/2.3-inch (6.08 x 4.56 mm ).
Since Panasonic GX85'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 Panasonic SZ1.
Another difference between these two cameras is that Panasonic GX85's sensor lacks anti-alias (Low-Pass) filter. Removing anti-alias filter increases the sharpness and level of detail but at the same time, it increases the chance of moiré occurring in certain scenes.
Below you can see the GX85 and SZ1 sensor size comparison.
As seen above, Panasonic GX85 has a 8.1x Larger sensor area than Panasonic SZ1. 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.