Pixel

Pixel is the minimum unit of image sensor. Pixels are spread in the area of the chip surface of the image sensor like the picture right hand side.
The more pixels, the higher resolution you will be able to get. On the other hand, process time will increase. To shorten process time, you may have to use high speed CPU or DSP that may cause higher cost.

*DSP = Digital Signal Processor. In this case, it will be used for image processing.

Whole pixels of image sensor is "Total pixels" and pixels used for image capturing actually is "Effective pixels".
Camera performance is based on the Effective pixels. Normally, pixels close to the edge of the chip would get influence of optical noise so Effective pixels at inner area of the image sensor chip will be used actually.