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A few things:
- Epub xhtml files support full unicode for text content. No restriction to ascii for text content at all
- Many people use what are called numeric or named entities to encode special characters but this is not required. Things like smart quotes, non-breaking spaces etc.
Unless you tell Sigil via its Preserve Entities preference settings to keep them, Sigil will simply use the actual unicode character.
Nothing is lost. If you want the entities to be put back, just add the entities you want to use to Sigil's Preserve Entities list in Preferences and run Mend again.
Note named entities are not permitted in epub3 which requires numeric entities if you decide to keep them.
If "entities" are what you mean by special characters, there is no need to use them for Kindle or for epub but they do make some special white space chars more easy to see.
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