From what I gather, a conservative obfuscation $\mathfrak O$ is an obfuscation where for any trace $\sigma$ of a program $P$, there exists a trace $\delta$ of the corresponding obfuscated program $\mathfrak O(P)$ such that every memory write and environment modification in $\sigma$ is also present in $\delta$. An example of a non-conservative obfuscation would be an algorithm that takes a C program compiled with GCC with low optimisation levels, somehow decompiles it into C and recompiles it with aggressive optimisations turned on. The resulting executable does inherently the same thing, but could possibly cut many memory writes as a result of optimisation.