Hi Neil, the physically bigger sensors in DSLRs allows them to capture a higher dynamic range with less noise. If you took the same shot with a DSLR and a P&S at their lowest ISOs, you may notice the P&S clipped some highlight and shadow detail. As you increased the ISO, the noise levels would also increase much quicker on the P&S.
DSLRs also have other benefits including better handling and response.
Your questions aren't stupid at all! In fact I even wrote an article pointing out the pros and cons of DSLRs and P&S's which you might find useful, here:
http://www.cameralabs.com/features/DSLR ... DSLR.shtml
You should also have a look at the following page from our Canon PowerShot G7 review, where you'll see what happens with a P&S compared to a DSLR as the sensitivity is increased.
I'd say if you were using the best P&S under very bright light at its lowest sensitivity, AND the scene didn't have any areas which were unusually bright or dark though, then you may get a similar result to a DSLR!
But sadly the Panasonic models we've tested have noise issues even at 100 ISO which you wouldn't get with a DSLR.
Have a look at these pages from our FZ8 and D40 reviews...
http://www.cameralabs.com/reviews/Panas ... oise.shtml
http://www.cameralabs.com/reviews/Nikon ... e4ca.shtml
As for price, sure, you'll have to pay a lot for a DSLR with a 10x zoom (or lenses to match), but do you really need a massive zoom range? The typical 3x kit lenses do cover most of the situations we find ourselves in!