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Dynamic range is a measure of the range of tones the sensor can capture. Cameras with low dynamic range will often show 'blown' highlights or blocked-in shadows. This test is carried out in controlled conditions using DxO hardware and analysis tools.
Dynamic range is measured in exposure values (EV). The higher the number the wider the range of brightness levels the camera can capture. This falls off with increasing ISO settings because the camera is having to amplify a weaker signal. Raw files capture a higher dynamic range because the image data is unprocessed.
Panasonic G7 dynamic range charts
JPEG dynamic range analysis: The Olympus OMD E-M10 captures the highest dynamic range for most of the sensitivity range, followed by the Sony A6000. The G7 compares more favourably with the other cameras at higher sensitivity settings.
Raw (converted to TIFF) dynamic range analysis: Up to and including ISO 6400 the G7 has an impressively wide dynamic range, indicating that images have a wide range of tones and will withstand a fair degree of manipulation.
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