Most consumer, and professional camcorders work in the same fashion,
- Light goes through lens
- Sensor gathers information based off what it sees
- Processor crunches it up and spits it out as a nice readable file
- The camera's storage device holds the finished video clip
In the past, step 3 was essential, since hard drive space was very finite, you could only hold so much video, until you had to replace the hard drive. The problem with this is you have to let your camera think for you, it decides how your video should be processed. The reason film was better, was because it bypassed step 3. It stored all the information it saw.
Today, the barrier of hard drive space is practically broken. A hard drive with 3 terabytes costs about $150, pretty cheap compared to purchasing film. New video cameras like the Ikonoskop A Cam work just like film cameras, except they are digital.
To get cinematic quality tools, it will cost you less than $10 000 for the software and camera. Before I was around that level of gear could easily cost into the hundreds of thousands.
The reason this is so amazing, is it allows the artist to take risk. If you aren't burning film, there is no harm in taking chances on new ideas. If you have the passion, the gear doesn't limit you so heavily. I am legitimately considering writing a musical in which cannibals kidnap a defenceless man, and sing about it, while he desperately attempts escape.
I can do this because there isn't risk, if I didn't pay much to produce it, I have little to lose, and if it is a success the profit margins are wider. Who needs Hollywood when you can make stuff without?