Why does dragging an imported video into a project reduce the file size by half?

I used a Canon Vixia HV40 to import 1 hour of HD video filmed using 24F and cina mode. My import and project properties were as follows:widescreen (16x9, 24F, cinema, import size = full, original size.
The specifications for the imported file are as follows/:
Size: 22.12GB
Dimensons: 1920 x 1080
Codec: Apple Intermediate Codec, Linear PCM
Color Profile: HD(1-1-1)
Audio Channels: 2
Total Bit Rate: 47,113
When I drag the imported file into a new project, the resulting .mov file has the following specifications:
Size: 9.67GB (approx half the size)
Dimensions 1920 x 1080 (same)
Codec: H.264, AAC (different)
Color Profile: HS(1-1-1) (same)
Audio Channels: 2 (same)
Total Bit Rate: 20,607 (approx half)
What causes the file size reduction and bit rate reduction? Is it a result of the different codec? Is there any corresponding loss of video quality that results from the conversion?
Thanks for your answers in advance.

Thanks a lot for your quick and detailed response!
Maximum image quality and file size are not the same thing, for a start.
Yes, but with JPG's they tend to be correlated, aren't they?
When you view a photo in iPhoto it's a composite of the original and the decisions recorded, and applied live as you view.
Oh, I always thought iPhoto makes a copy of the orginial and modfies that ...
If you want to use that photo for something then you have to export it. This make a new file with your photo in it. When you export you have a lot of options - including ones that will make the filesize bigger than the original. This User Tip
https://discussions.apple.com/docs/DOC-4921
has details of the options in the Export dialogue.
Ah, that is cool. That solves my problem.
If you use drag and drop from the iPhoto Window that's a form of exporting too -but you have no options there. You get the iPhoto Preview. That's a 'handy-good-enough-for-most-things version of the shot. If you want more options use the export command.
That's what I tripped over. (I used the email feature from within iPhoto for a quick sharing ...)
Thanks, G.

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Why does dragging an imported video into a project reduce the file size by half?

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