Panasonic LX10 has a 20.0MP 1 (13.2 x 8.8 mm ) sized BSI-CMOS sensor . On the other hand, Panasonic LX7 has a 10.0MP 1/1.7 (7.44 x 5.58 mm ) sized CMOS sensor and features Venus Engine processor. Panasonic LX10's sensor provides 10MP more than Panasonic LX7's sensor, which gives a significant advantage in real life. You can print your images larger or crop more freely.
On the other hand, please keep in mind that Max sensor resolution is not the only determinant of resolving power. Factors such as the optical elements, low pass filter, pixel size and sensor technology also affects the final resolution of the captured image.
Below you can see the LX10 and LX7 sensor size comparison.
As seen above, Panasonic LX10 has a 2.8x Larger sensor area than Panasonic LX7. 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.