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The one feature of digital cameras that probably causes more confusion than any other is "digital zoom." While some people think that a 4x or 5x digital zoom makes a camera more versatile, in reality, a camera's digital zoom has very little value... and here's why:
Have you ever enlarged a picture and noticed that the enlargement was fuzzier than the original print? That's because the enlargement process simply makes the tiny dots that make up a photo larger. Larger dots means less fine detail per inch of print... and a grainier result.
This is really all a "digital zoom" does - it makes the individual pixels in an image larger. And this results in less fine detail per inch - both in print and on your camera's or computer's screen.
An optical zoom, however, uses the elements of the camera's lens to magnify the scene itself. The zoom lens works in the same way as a spotting scope or pair of binoculars (except that it has an infinite number of magnification settings). Since it's the scene itself that's magnified - and not the "dots" making up an image of the scene - an optical zoom provides a clearer, sharper result than a digital zoom ever could.
In fact, the digital zoom feature on your camera merely mimics the "zoom" capability of most image editing software. So you're much better off simply turning off the digital zoom in your camera's menu and doing any enlarging of the image in your computer. That way, you can enlarge an image, but control its graininess.