With this little digital zoom trick what they are doing is simply using a small fraction of the overall size of the sensor,that being the center 2 megapixels. The rest of the sensors outer 16 megapixels are not in play, thus reducing the overall effective size of the sensor.
As the effective sensor size decreases, which is what digital zoom is, the depth of field will increase for each given aperture. F2.8 on a smaller sensor will still gather light like a F2.8 on a big sensor but F2.8's depth of field on that smaller effective sensor will look something more like F5.6. Ever notice that point and shoot cameras, even those with F2 apertures, create very little subject seperation, at least compared to what F2 would look like on a larger sensor. Point and shoots also typically don't go any higher then F8 because beyond F8 there would be no additional depth of field to be gained, not to mention beyond F8 diffraction would start to rob resolution. This is all because smaller sensors require one to get further away from their subject, or to use a shorter focal lengths in order to frame their subject with the same field of view. This means that one has to use progressively larger apertures on smaller sensor cameras in order to maintain the same depth of field as we'd see on a larger sensor.
Also, as the article mentions, the full native resolution of the GH2's sensor is 4608 x 3456 which is far more resolution then 1080p, but on output that native resolution goes through some compression and processing algorithms to scale it back to a 1080p output. I'm assuming that the Panasonic uses a different set of compression and processing algorithms when the ETC mode is used, as the native resolution of the center 2 megapixels equals a perfect 1920X1080.
Anyway, I hope that makes sense.
