Analog vs. Digital
Camcorders are often classified by their storage device: VHS, Betamax, Video8 are examples of older, videotape-based camcorders which record video in analog form. Newer camcorders include Digital8, miniDV, DVD, Hard drive and solid-state (flash) semiconductor memory, which all record video in digital form. The imager-chip is considered an analog component, so the digital namesake is in reference to the camcorder's processing and recording of the video.
It should be noted that the take up of digital video storage in camcorders was an enormous milestone. MiniDV storage allows full resolution video (720x576 for PAL,720x480 for NTSC), unlike previous analogue video standards. Digital video doesn't experience colour bleeding, jitter, or fade, although some users still prefer the analog nature of Hi8 and Super VHS-C, since neither of these produce the "background blur" or "mosquito noise" of Digital compression. In many cases, a high-quality analog recording shows more detail (such as rough textures on a wall) than a compressed digital recording (which would show the same wall as flat and featureless).
The highest-quality digital formats, such as MiniDV and Digital Betacam, have the advantage over analog of suffering little generation loss in recording, dubbing, and editing (MPEG-2 and MPEG-4 do suffer from generation loss in the editing process only). Whereas noise and bandwidth issues relating to cables, amplifiers, and mixers can greatly affect analog recordings, such problems are minimal in digital formats using digital connections (generally IEEE 1394, SDI/SDTI, or HDMI).
Both analog and digital can suffer from archival problems. Theoretically digital information can be stored indefinitely with zero deterioration on a digital storage device (such as a hard drive), but other types of media can have problems. Both analog and digital tape formats are prone to deterioration over time, and since digital often squeezes tracks only ~10 micrometers apart (versus ~500 ?m for VHS), a digital recording is more vulnerable to wrinkles or stretches in the tape that could permanently erase several scenes worth of digital data, but barely register as "noise" on an analog tape. Even digital recordings on DVD are known to suffer from DVD rot that permanently erase huge chunks of data. Thus the one advantage analog seems to have in this respect is that an analog recording may be "usable" even after the media it is stored on has suffered severe deterioration whereas it has been noticed[1] that even slight media degradation in digital recordings may cause them to suffer from an "all or nothing" failure, i.e. the digital recording will end up being totally un-playable without very expensive restoration work.
Modern recording media
Some recent camcorders record video on flash memory devices, Microdrives, small hard disks, and size-reduced DVD-RAM or DVD-Rs using MPEG-1, MPEG-2 or MPEG-4 formats. However because these codecs use inter-frame compression, frame-specific-editing requires frame regeneration, which incurs additional processing and can cause loss of picture information. (In professional usage, it is common to use a codec that will store every frame inidividually. This provides easier and faster frame-specific editing of scenes.)
Most other digital consumer camcorders record in DV or HDV format on tape and transfer content over FireWire (some also use USB 2.0) to a computer, where the huge files (for DV, 1GB for 4 to 4.6 minutes in PAL/NTSC resolutions) can be edited, converted, and (with many camcorders) also recorded back to tape. The transfer is done in real time, so the complete transfer of a 60 minute tape needs one hour to transfer and about 13GB disk space for the raw footage only - excluding any space needed for render files, and other media. Time spent in post-production (editing) to select and cut the best shots varies from instantaneous "magic" movies to hours of tedious selection, arrangement and rendering.