Why does LUMX use an optical image stabilizer?

The optical hand-shake compensation function featured in LUMIX was developed by Panasonic for digital video cameras. The system uses gyrosensors to detect jitter, then adjusts the lens system to compensate. This happens so quickly and precisely, you probably won’t even notice it. Some cameras compensate for hand-shake using methods such as increasing sensitivity. With LUMIX, however, we insisted on using the more technologically advanced optical system. The reason was simple: With optical systems, the image is not electronically processed so there is minimal degradation and higher quality.

MEGA O.I.S. controls hand-shake so effectively, you can shoot one shutter speed slower.
The Venus Engine III introduces an enhanced MEGA O.I.S. system with even greater correction capability than before. When you’re taking handheld shots, the MEGA O.I.S. works so effectively that you can use a shutter speed more than 3 steps slower than the shutter speed that is generally considered to be the limit for handheld shooting, which is calculated by the formula "1/focal length (1 divided by the focal length)." You get clear, beautiful shots and more shooting flexibility.
Continually improving O.I.S. speed and performance.
LUMIX features the innovative and advanced MEGA O.I.S. in models that range from the compact models to the high-powered zoom models. MEGA O.I.S. employs gyrosensors, offers two compensation modes, and boasts higher speed and precision than its predecessors. The system reflects Panasonic’s efforts to continually push forward in developing compensation technology that delivers the sharpest, most vivid pictures possible.

MODE-1
This is the conventional mode.
Because it compensates for jitter all the time,the subject in the LCD and viewfinder is easy to see.		 MODE-2
Compensation is activated when the shutter is pressed. Because the subject is already at the lens center when compensation begins, image quality is high and the compensation limit is seldom exceeded.
See image stabilization for yourself! See MEGA O.I.S. at work!