Broadly a codec is something that encodes a data stream or signal for storage or perhaps transmission and decodes it for playback or editing.
Hence codec – coder-decoder
There are many types of codec as you will see from this list
https://en.wikipedia.org/wiki/List_of_codecs
However in video we only work with a more limited selection but that can still lead to issues.
Some are optimised for good quality at a high compression rate, H264 for example which is very often used for DSLR cameras as a shooting format.
However H264 is a very poor codec for editing as it is not a frame based codec and requires a lot of computing power to decode it.
So in that case the file size is made small for HD but it is not universally the best option.
So in the example of H264 you always transcode to ProRes (an Apple codec) in order to edit.
This increases the file size as ProRes is not as compressed as H264 and has a higher bitrate.
So this does indeed increase the file size but it makes editing much easier and faster in FCP.
In the case of your Z1 camera, that shoots in DV format, which is another type of cedec, and can shoot DV, DVCam and HDV.
So for HD you would choose the HDV format – this will give you the best quality of the 3 options.
FCP can edit in any of those options without having to further decode/transcode so you do not need to change the format or codec like you do in the H264 example.
So just shoot HDV and then do an Easy Set up in FCP for HDV at the same frame rate etc and you should be good to go.
Hope that helps
best wishes
Neil
http://www.patience.tv