Panasonic ZS7 has a 12.0MP 1/2.3-inch (6.08 x 4.56 mm ) sized CCD sensor and features Venus Engine HD II processor. On the other hand, Leica M-E Typ 220 has a 18.0MP Full frame (36 x 24 mm ) sized CCD sensor .
Leica M-E Typ 220's sensor provides 6MP more than Panasonic ZS7's sensor, which gives a significant advantage in real life. You can print your images larger or crop more freely.
On the other hand, please keep in mind that Max sensor resolution is not the only determinant of resolving power. Factors such as the optical elements, low pass filter, pixel size and sensor technology also affects the final resolution of the captured image.
Below you can see the ZS7 and M-E Typ 220 sensor size comparison.
As seen above, Leica M-E Typ 220 has a 31.2x Larger sensor area than Panasonic ZS7. 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.