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The key difference is that instead of focusing the light on a strip of photochemical film as in traditional cameras, digital cameras use an image sensor, called a charge coupled device (CCD), to capture the image.
FORBES: Technology briefing
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Inside is a 1.18 million-pixel charge-coupled device, or CCD.
FORBES: Shoot Your Own HDTV Movie
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Apart from the arrival of less pricey full-frame digital SLRs, the other recent development that has impressed your correspondent is the way imaging chips are migrating from CCD (charge-coupled device) technology to CMOS (complementary metal-oxide semiconductor), used widely in the computer industry.
ECONOMIST: A die-hard analog photographer goes digital