Both Panasonic LX7 and Panasonic ZS3 have 10.0 MP resolution sensors but Panasonic LX7's sensor is 1/1.7" (7.44 x 5.58 mm ) and Panasonic ZS3's sensor is 1/2.33" (6.08 x 4.56 mm ).
Since Panasonic LX7'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 ZS3.
Below you can see the LX7 and ZS3 sensor size comparison.
As seen above, Panasonic LX7 has a 1.5x Larger sensor area than Panasonic ZS3. 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.