The compact cameras on sale this month are advertising eight, nine, ten megapixels, and past a certain point every one of those extra millions is making the pictures worse.
The mechanism is not complicated and nobody selling cameras wants to explain it.
A sensor is a fixed piece of silicon. In a pocket camera it is roughly the size of a fingernail, and it does not get bigger when the megapixel count goes up. What changes is how finely that same area is divided. Ten million photosites on a fingernail means each one is smaller than eight million would have been, and a smaller photosite catches fewer photons.
Fewer photons means a weaker signal, and a weaker signal has to be amplified harder to produce a usable image, and amplification magnifies whatever noise is in there alongside the picture. So you get grain in the shadows, colours that go blotchy in dim light, and a narrower range between the brightest thing the camera can record and the darkest.
Then the processing tries to hide it, which smears away fine detail, which is the thing the megapixels were supposedly for.
I cannot think of another specification war where the winning number actively degrades the product. Faster processors are faster. Bigger discs hold more. Here the figure goes up, the image gets worse, and the customer is choosing on exactly the number that predicts the disappointment.
It persists because megapixels fit on a shelf label. Nobody can print dynamic range on the front of a box in a way a shopper can act on, and no salesperson is going to talk anybody through photosite area on a Saturday afternoon.
Consider also what the number is for. Six megapixels prints beautifully at ten by eight. Almost nobody prints at all any more, and a photograph viewed on a monitor is being shown at about two. The resolution has been surplus for years, and the surplus is being paid for in noise.
What matters instead is the size of the sensor and the quality of the glass in front of it, and both of those are physical, expensive, and impossible to inflate for marketing purposes. Which is precisely why the industry competes on the one number it can raise for free.
If you are buying, find the sensor dimensions in the specifications and ignore the front of the box entirely.