Start From the Beginning: I/O

I've found this is one of the weak points of my experience/knowledge base. What exactly are I/O devices used for and what benefits do they bring over recording to tape or flash storage?

I've also heard that most cameras (including the Canon XH-A1) that have digital outs or HDSDI outputs can bypass the HDV 4:2:0 compression and record to a 4:2:2 colorspace. So I figured I'd give it a whirl. I took my XH-A1, setup my greenscreen and talent, and did some tape recordings and then ran the HDSDI output directly into a Blackmagic Intensity Pro card, into FCP6. Imported the footage into AE and zoomed in to see if there was any difference in the color info between the white pixels of the talent's shirt and the greenscreen. No noticeable difference. Looked like the same 4 pixel blocks. I'm beginning to think I just don't understand I/O devices. It seems like one day they were suddenly all over the market, and everyone just assumes you know what they do.

I'm very humbled by all this.