Consider the monitor in front of you. Assuming an average resolution of 1280x1024 you have a roughly 1.2 megapixel screen in front of you how does it look to you without getting too close?
Imagine that your picture is made up as an excel spreadsheet. Each cell is coloured differently until you zoom out and see the whole image. If I tell you you can have 6 million or 10 million pixels you'll find you can draw similarly detailed overall images; the real diffences only become clear when you look very closely.
More important is whether I let you use all the colours available, or whether you are only allowed to use the darker ones. There is also the issue of whether the colour of one pixel is changed by what those all around it have.
That is essentially the dilemma. A good DSLR will let you have bright colours and definition. A cheap camera will tend to have smudging and bad light sensitivity. The obsession with MP came around because manufacturers like to have simple numbers to throw at consumers rather than muddling the issue with the far broader range of important specifications which effect actual benefit. This is exactly why in places like PC world '2.4GHz' computers are talked about, rather than your average joe public actually looking at things like how much RAM, what type of processor it is, and what type of graphics card it has; equally consumer level camera buying focusses on MP, rather than ISO, shutter speed, aperture control, etc.