Jeremy;
All sustained exercise in the aerobic realm stimulates many adaptations in the working muscle cells, resulting in improved aerobic capacity. I have heard some discussions that glycogen depletion in non-active muscles will also improve aerobic function. But I think the main benefit will occur only in the working muscles. Since the mitochondria are where all the aerobic metabolism occurs, these adaptations that I alluded to take place mainly in the mitochondria. Increased capitalization in the working muscles is a benefit that takes place outside the mitochondria.
In short, z1 and Z2 training improves mitochondrial function (efficiency might not be the correct term as it has several different definitions). Because this intensity is powered mainly by ST muscle fibers, those are the fibers that get the benefit. At higher intensity, faster twitch fibers are used, and those fibers see an increase in their aerobic function (again mainly due to mitochondrial adaptations).
I hope this helps,
Scott