How does Final Cut Pro X ProRes 422 compare to H.264 compression?

This answer is meant to be very basic, if you want more details there are a lot of great articles already written, like this one.

The two things that matter in this comparison, are the size of the files vs the quality of the viewing image and whether or not you'll be doing a lot of editing with the video files.

We use (and recommend) H.264 or MPEG4 compression of your DV video files because the compressed images and the original images are nearly identical visually, unless you have a very trained professional eye for video imagery.  Also, the files are much smaller and it's the best format to use when uploading to YouTube.

However, if you are going to do a lot of technical editing, color correction, titling and effects, a compression technology like ProRes is a better choice.  In this case, import the files as uncompressed using LifeFlix, then move them over to Final Cut Pro X.  Learn more.