Canon S120 has a 12.0MP 1/1.7" (7.44 x 5.58 mm ) sized BSI-CMOS sensor and features Digic 6 processor. On the other hand, Panasonic G85 has a 16.0MP Four Thirds (17.3 x 13 mm ) sized CMOS sensor .
Another difference between these two cameras is that Panasonic G85'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 moire occurring in certain scenes.
Below you can see the S120 and G85 sensor size comparison.
As seen above, Panasonic G85 has a 5.4x Larger sensor area than Canon S120. 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.