Both Nikon L110 and Olympus E-P3 have 12.0 MP resolution sensors but Nikon L110's sensor is 1/2.3-inch (6.17 x 4.55 mm ) and Olympus E-P3's sensor is Four Thirds (17.3 x 13 mm ).
Since Olympus E-P3'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 Nikon L110.
Below you can see the L110 and E-P3 sensor size comparison.
As seen above, Olympus E-P3 has a 8.0x Larger sensor area than Nikon L110. 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.