Compact system cameras (also known as interchangeable-lens cameras) bridge the gap between compact digital cameras and digital SLRs. They're considerably smaller than dSLRs, yet have the same advantage of interchangeable lenses.
CSCs lack the mirror of a digital SLR, allowing them to be much more compact. However, with no mirror, they don't have an optical viewfinder – many models have a single LCD screen (just like a compact camera) that must be used for composing images. Compact System Cameras have much larger sensors than compact digital cameras, though, which means they can rival the image quality of dSLRs.
They're also comparable to digital SLRs in terms of performance. They turn on quicker than most compact cameras and can shoot continuously at up to several frames per second.
Compact System Cameras are really for those who want the versatility and quality of a dSLR, but with the ease of use a compact camera. They aren't quite as small, especially with a large zoom lens attached, but are usually considerably lighter and less bulky than dSLRs. This means you're far less likely to leave it at home.
As with digital SLRs, different manufacturers use different lens mounts, so make sure you check the range of lenses before settling for a particular model. Panasonic and Olympus share the Micro Four Thirds system, so lenses are interchangeable between camera bodies, but Sony has its own E-mount system for the NEX range of CSCs. Similarly, Samsung's NX range is compatible only with the company's NX-mount lenses.
Nikon and Fuji have recently joined the CSC ranks and both have new lens mounts: Nikon 1 and X Mount respectively. Only Pentax has kept the same K-mount system from its full-size digital SLRs for the K-01 and Q Compact System Cameras.
Various adaptors are available for CSCs for attaching lenses from other manufacturers, but these are typically ‘dumb' which means you'll have to control focus and exposure manually.
When CSCs were first introduced a couple of years ago, prices were higher than many entry-level digital SLRs. Now, though, you can buy top-quality models for under £350 with a 14-42mm ‘kit' lens included. Extra lenses can be expensive, though, and can easily cost more than the camera itself. Again, it pays to work out which lenses you're likely to want and compare prices between manufacturers before committing to a particular system.
Most people will be content with a ‘pancake' lens and a zoom lens. The pancake is a shallow, non-zoom lens which is useful when you want the camera to be as small as possible. These are often available instead of a small zoom lens as part of the kit when you first buy the camera. You'll have to move (rather than zoom) to get close to the action, but the camera will fit in any bag.
When you can't get closer, a zoom lens is the solution. Look for a maximum focal length of at least 150mm. A zoom lens that starts at a wide angle is handy as it will save you having to change lenses as it will work equally well for landscapes as well as taking photos of faraway objects. Such lenses are expensive, though, so you may have to settle for a standard kit lens (14-42mm, for example) and pair it with a telephoto zoom (40-150mm, say) to keep costs down.
Virtually all CSCs can record HD video, but quality varies. If video is a priority, choose a model that can record 1080p video and also has a microphone input so you can connect a higher-quality accessory as integrated microphones tend to be relatively poor quality.