In case of a modified binary file, and a later "fossil update" taking in changes in that file, fossil will overwrite the local file with that incoming.

It will report CONFLICT on that file, leaving "fossil undo" as the only option to get the local changes back.

A user may loose changes in that situation, if he fails to see the CONFLICT message. I think that fossil should, like subversion, copy the file with local changes into another filename in the same directory, like "myfile.odt~local".