Thanks Jeremey for the information.
For anyone else that is interested. My friend Kevin gave me this answer. It is very helpful too!
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Try this link for an explanation of the differences between the two formats:
http://en.wikipedia.org/wiki/Betacam#HDCAM_.2F_HDCAM_SR
In regards to your specific questions:
The "smaller particles" you mentioned refers to the density of the magnetic coating material on the recording tape, allowing for a higher data recording rate (hence higher quality) for SR.
8-bit versus 10-bit refers to the amount of data captured per recorded pixel. Each bit allows for two potential values, so 8-bit recording offers a total of 256 values per pixel and 10-bit allows 1024 values. Remember we're trying to digitally represent a vast range of potential light values in a recorded scene, so having more values allows for a finer representation of each scene. Compare this to recording movies on film, where the grains of silver on the film respond in a continuously variable manner to incoming light (rather than the discrete values of digital recording).
MPEG4 is a newer and more efficient way of compressing video images than DCT. The purpose of compression is to mathematically reduce the raw video data into the available recording bandwidth, which is less than would be required to capture every bit of data coming off the camera's sensor. Note that 1920x1080 video at 29.97 frames per second with 10 bits per pixel would require over 2 billions bits of storage per second (2 Gbps) to capture all of that information, but the normal data rate for HDCAM SR is only 440 million bits/second (440 Mbps) and HDCAM is only 144 Mbps. But if you're shooting a video of a blank wall in a single color you don't need all that information to accurately describe the scene, so the compression algorithm can "throw out" some data with varying ability to recreate it later depending on the complexity of the scene.
Most of the fuss over video quality relates to how well all of the tricks used to save bandwidth represent the original scene so we can view and enjoy the final images on TV or movie screens. Real life contains far more visual data than we can hope to capture and deliver to viewers, so it's all about tricking the human eye to accept a heavily compressed image. Don't forget that we're starting by representing real life in discrete images of (typically) 24-30 frames per second, which is a big compromise from the start since life doesn't happen in discrete moments.
Also note that standard DVD video only contains about 4-8 megabits per second of information in 8-bit color using MPEG2 compression at a resolution of 720x480 pixels (NTSC), so this is much less information than recorded by most home video cameras, let alone HDCAM or HDCAM SR. With network TV or high-definition DVDs the delivery bandwidth can be as high as 35 Mpbs or so, but that's still significantly less than many HD recording formats. The main reasons to use a better recording format are (1) if you plan to deliver on film when you're done, and (2) because it's always better to start with a high quality source regardless of the compression quality of the final delivered image. But unless you're delivering on film most of your recorded data is going to be lost before it gets to the viewer, so keep that in mind when considering what recording format to use.
