There's other quality issues in an image though, edge definition and depth of field for example. All things being equal a larger sensor with equivalent glass will always provide better edge definition, and having both 35mm and m43 chip bodies I would say the difference is noticeable. And for depth of field it depends what you want. I can isolate a subject much better with a large chip camera, but that's no use for a macro image where the small chip camera is better.
Bad lens, bad image, a larger sensor doesn't help in any way. Good lens, good image, a smaller sensor isn't worse.
If you want shallow DoF, you can get plenty of m43 and APSC (16/1.4, 56/1.2, 90/2) lenses for shallow DoF. If you want razor thin DoF - nose sharp, eyes blurred - you need <=1.4 35mm glass.
If you want full body portrait with blurred near background you need medium format lenses (or far away background).
If I build a lens that will cover a hypothetical 16MP sensor with good quality over the whole sensor, it will also cover a hypothetical 16MP sensor of half the dimensions. However the smaller sensor demands a higher optical resolution (line pairs / mm) than does the larger to resolve those 16MP with the same clarity, and so the smaller sensor will deliver lower effective output resolution (again, in terms of resolvable line pairs) than will the larger sensor given the same glass.
And if I'm searching for shallow depth of field, again the larger sensor has inherent advantages. Physics isn't your friend once you start trying to build arbitrarily fast small sensor lenses to replicate what's easy with a larger sensor lens.
I'd be delighted if these concerns weren't true; my m43 camera is much lighter to cart around than my FX one :) And yes, we can now get DR and noise performance from a smaller chip that we used to not be able to with a larger chip - but there are definite advantages still to the larger chip that won't go away.
Faster lenses help up to a point but since f stops of under 1 aren't really a thing, you're not going to replicate a large sensor with a fast lense with a smaller sensor.
Higher Resolution, yes if you need 50mp because 24mp is not enough to print 3m x 2m.
I shoot pics of my kid with a $3500 35mm dSLR and constantly save pictures to my phone. Whenever I show people the pics on my phone, they almost immediately say how amazing the photos are and ask what kind of phone this is.
I'm not some distinguished photographer, but with the right camera and lens, the color, contrast, bokeh, light, some minimal composition (not in that order) all come together very nicely.
Same holds true for video as well.
My point is, this comes up again and again, without any context that the pics weren't taken with the phone.
"Same holds true for video as well."
Which is the reason everyone seems to shoot with a GH5S and no longer with 5DMXs.
Also, and I think we agree on this, "better lens" doesn't need to mean "expensive", I can get very similar results from a cheap 40mm f/2.8 vs. and a 10x cost 50mm f/1.2 when the lighting is difficult and I can use a very high ISO.
As for the video part of your comment, let's agree to disagree.
I was trying to say that I get people commenting on how good my videos are because they're used to seeing video shot on mobile phones.
However, I'll take Canon color and 1.74x crop 4k over a 2x crop any day...shit 500mbps Canon codec be dammed.
I'm totally aware of the difference in quality between a decent camera and a phone.
An APS-C camera in capable hands is just as good as full frame.
You are correct, On a sunny day both types of device will produce similar looking 1000 pixel wide web-ready exterior landscape shots. Now take them into a dark cathedral with high stained-glass windows, try for a quick portrait of a priest walking by holding a candle, and the DSLR will still get the shot, and it will look great. Smartphones cannot do this...yet.
I'm not too hung up on shallow DoF - it looks nice for a portrait or picture of your meal but I think there's always room for higher resolution sensors capturing a world of visual information (provided they can produce great dynamic range which a lot of recent/new high resolution FF sensors do).
APS-C, similar to M4/3's 16-20 megapixel sweet spot, seems to be stuck at 24 megapixels for good dynamic range results.
The main difference would be the selection of lenses, but even with similar DOF/FOV, the 40D still produces better images IMHO.
With 'Better images' people often mean today less noise and higher dynamic range.
While this is true, the returns are diminishing.
10y ago a 35mm sensor was 1 stop better than APSC, today a 35mm sensor is 1 stop better than APSC [1]. The difference is that 10y ago an APSC sensor was usable at 800 iso and 35mm at 1600iso, while today an APSC sensor is usable at 6400iso and 35mm at 12800iso. The usable range today for the smaller sensor is 7 stops (starting at iso 100) and 35mm is 8 stops, while it was 4 stops and 5 stops 10y ago. 35mm will always be 1 stop better for the same generation [2], but the increase of 1 stop in relation to the usable range (1/5 vs. 1/8) is going down. Same for dynamic range.
[1] Due to 35mm sensor being double the size of APSC and iso being log2
[2] And manufacturer