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 ZR3 has a 14.0MP 1/2.33" (6.08 x 4.56 mm ) sized CCD sensor and features Venus Engine HD II processor.
Below you can see the S120 and ZR3 sensor size comparison.
As seen above, Canon S120 has a 1.5x Larger sensor area than Panasonic ZR3. 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.