Environmentally benign (1-x)Ba(Ti0.8Zr0.2)O3-x(Ba0.7Ca0.3)TiO3 (BZT-BCT) ceramics are promising materials due to their remarkable high piezoresponse [Liu and Ren, Phys. Rev. Lett. 103, 257602 (2009)PRLTAO0031-900710.1103/PhysRevLett.103.257602]. In this Letter, by focusing on local and average structure in combination with macroscopic electromechanical and dielectric measurements we demonstrate the structure property relationship in the tetragonal BZT-BCT ceramic. During high-temperature cubic to tetragonal phase transformation, polar nanoregions are manifested through the spontaneous volume ferroelectrostriction at temperatures below K. Temperature-dependent local structural investigations across the Zr edge extended x-ray absorption fine-structure spectroscopy reveal an anomalous collaboration between the and octahedra. These octahedra compromise their individuality during polarization development. The presence of domains of submicron size embedded inside the macroscopic ferroelectric regions below , as well as their hierarchical arrangement, is observed by piezoresponse force microscopy. Effects of the existence of the structural/polar heterogeneities below are observed also when polarizabilities of the poled and unpoled samples are compared; the poled sample is found to be more susceptible to the electric field. In addition, by using electric field dependent x-ray diffraction studies we also show that this ceramic under field exhibits a reduction of tetragonal distortion, which is consistent with earlier reports.