When Nokia announced the 41-megapixel 808 PureView smartphone at MWC 2012, CNET's associate editor Lynn La said "it is a phone that has so many megapixels, its megapixels have megapixels." That, it turns out, was a pretty accurate statement.
But, before I get into what that all means, judging by comments I've read there seems to be some confusion about the largeness of the sensor. The 808's image sensor is not only larger in resolution, but physical size. It's larger than the ones in most--if not all--current smartphones as well as the majority of point-and-shoots.
The 8-megapixel iPhone 4S, for example, has a 1/3.2-inch type sensor while most compact cameras use a 1/2.3-inch type sensor. The 808's in comparison is a 1/1.2-inch type, which is quite a large sensor for a mobile device. (Do the division and you get the approximate diagonal measurement of the sensor.) That's 2.5 times larger than the one Nokia used in its 12-megapixel N8.
Of course, packing a larger sensor with more than three times the number of pixels doesn't translate into better photos: smaller pixels collect less light, which worsens image quality. The thing is, Nokia doesn't really want you to use the full resolution of its sensor. Not for giant photos, anyway.
Instead, the 808 defaults to a 5-megapixel resolution. Through a process called pixel oversampling (though some might call it pixel binning), Nokia combines seven pixels into one superpixel. Doing that helps eliminate image noise in low-light conditions and, according to Nokia, makes noise virtually nonexistent when shooting in good lighting. So while the 808 can be set to take 38- or 34-megapixel images depending on the aspect ratio used--4:3 or 16:9, respectively--it's not why Nokia used such a high-resolution sensor.
The pixel oversampling also allowed Nokia to develop a lossless digital zoom, which is probably the most important part for a lot of people. Basically, as you zoom out the amount of oversampling reduces until you've reached the limit of the actual resolution. In other words, if you have it set for 5 megapixels you can continue to zoom until it's no longer oversampling and simply using a 5-megapixel area of the sensor. There is no upscaling or interpolation, it's just a 5-megapixel photo. At that resolution, it will give you about a 3x lossless zoom for photos and a 4x zoom for movies shot in full HD. Reduce the resolution, and you get more lossless zoom.
For controlling the zoom, Nokia's added a new slide zoom feature that lets you slide your finger up and down anywhere on the display to smoothly move in and out. And with no moving optics, you won't hear the zoom while recording.
Nokia 808 PureView
Speaking of optics, Nokia's lens choice makes things even more interesting. The Carl Zeiss 5-element lens has one high-index, low-dispersion glass lens instead of being all plastic like other smartphones. It has a large f2.4 aperture with a 26mm focal length for 16:9 and 28mm for 4:3. Nokia claims the combination along with the large sensor size will give you some nice background blur for close-ups; the 808 can focus as close as 6 inches from a subject. (Add in the lossless zoom and you can get very close to what you're shooting and presumably still get great fine detail.)
Also, with no optical zoom, the camera uses the f2.4 aperture through the range of the zoom. Optical zooms on compact cameras use increasingly smaller apertures as you extend the lens, which means you have to use higher ISO sensitivities and slower shutter speeds to avoid blur. The 808's f2.4 lens and digital zoom won't have that issue, so it can keep ISO low for less noise and still use faster shutter speeds.
If you're interested in more details on all that the sensor, lens, and processing combination of the Nokia 808 PureView has to offer, read Nokia's white paper on the subject.
Lastly, I've seen some mentions that this is comparable to Lytro's sensor technology, but it's really not. Lytro's sensor design is unique, while the 808's sensor is pretty much a traditional design just with a super-high resolution, which Nokia takes full advantage of to produce better photos.
At least, that's what Nokia's saying. We'll have to wait till we get our hands on one to know for sure.