Canon SX120 IS has a 10.0MP 1/2.5-inch (5.744 x 4.308 mm ) sized CCD sensor and features Digic 4 processor. On the other hand, Olympus XZ-10 has a 12.0MP 1/2.3-inch (6.17 x 4.55 mm ) sized BSI-CMOS sensor .
Below you can see the SX120 IS and XZ-10 sensor size comparison.
As seen above, Olympus XZ-10 has a 1.1x Larger sensor area than Canon SX120 IS. 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.