if ur lens move while ur zooming, optical is being used. but u have to be careful that its not digital zooming, as BOTH optical AND digital zoom can be used at the same time. u can check ur camera manual, and u should.
if ur model is LZ-2, ur cam has 6X optical and 4X digital zoom. optical zoom is using lens to get a faraway object seems closer. a digital zoom, is something like using a picture viewer and just enlarging the picture on the PC. as said above, optical zoom is defintely better.