Both Nikon D700 and Panasonic FZ35 have 12.0 MP resolution sensors but Nikon D700's sensor is Full frame (36 x 24 mm ) and Panasonic FZ35's sensor is 1/2.3-inch (6.08 x 4.56 mm ).
Since Nikon D700'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 Panasonic FZ35.
Below you can see the D700 and FZ35 sensor size comparison.
As seen above, Nikon D700 has a 31.2x Larger sensor area than Panasonic FZ35. 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.