Energy conservation applies specifically to conservative forces, where mechanical energy (kinetic plus potential) is conserved. In contrast, when non-conservative forces, such as friction, are present, mechanical energy is not conserved as it transforms into other energy forms like heat and sound. Despite this, total energy remains conserved in all scenarios. Therefore, while mechanical energy can be lost due to non-conservative forces, the overall energy in a closed system is always preserved. Understanding these distinctions is crucial for analyzing energy transformations in physical systems.