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The Micro Four Thirds is a new standard of cameras with a 17.3x13mm sensor (2x magnification in comparison with 35mm) and without mirror: thanks to this design, the MFT cameras can be lighter and smaller, and they offer several advantages in comparison with reflex cameras. They can use electronic viewfinder - a technology that in future will surpass the optical viewfinder, thanks to its capability of real-time preview of exposure and depth of field; they don't need mirror lock up; and the sensor is more easy to clean.
The Olympus E-P1 (now replaced by the almost identical EP-2, that has an optional electronic viewfinder) has an unusual "retro style" and it offers truly compact dimensions. I have used it for a couple of weeks during my trip to France, alongside with my Canon cameras, and in this article I have reported my experience.
 
Quick specifications comparison (E-P1 vs 500D and 14-42 vs 18-55)