Z-RAM has nothing to do with SD Card. If It were using SD card, it would be better to use Internal and make Swap Partition for paging. Z-RAM, actually, compresses too old cached process and keep it in RAM, instead of moving to Internal memory or SD Card. Phone without SD card may also has Z-RAM.
Harsith, u were asking how Z-RAM affecting performance. Actually Z-RAM feature is feature that should be enable in Kernel, it Compresses old, or long, or unused background process, like Cached process that remain in RAM, it compresses, and keep it in Allocated limit in RAM. And when needed, it again decompress and compress again and again.
It is very good feature in Linux and now Windows also use same for 10.
But issue with G2 is, G2 has 891 mb available RAM, out of which at least 250 mb is consumed by System framework, apps and all. But Enabling Z-RAM, it needs approximate limit, beyond that Z-RAM will not hold cached process, means if In Z-RAM pricess are cached of 3-4 hours used apps or process, it will kick out and will compress recently cached process. In all these, it uses CPU, and CPU of G2 is 1.2 ghz, not that much powerful and while all these process, it takes 100mb RAM more in System, and As more and more device uptime goes, Z-RAM do more and more compression and releasing and kicking out if Cached too old process.
As This forum don't allow modding and all, still I'm daring a bit, in Custom ROM, there is No Z-RAM enabled, so it performs better, without overheating issues. And Fir Sane reason Google ommitted this Z-RAM in Android One device, which also has 8-16 GB internal memory, 1gb RAM out of which 0.94gb available for utilization, and no Z-RAM feature enabled in it and it has 1.3 ghz Quad core processor.
After doing some modding stuffs, disabling Z-RAM, made G2 better performer that it is in current state.