How can a transaction prevent data loss when an error occurs?

A transaction can prevent data loss when an error occurs by rolling back changes when an error is caught. This mechanism ensures that the system maintains data integrity by reverting to the last stable state prior to the error. When a transaction is initiated, it encompasses a sequence of operations that must all succeed together to ensure meaningful changes to the database or system state. If any operation within that transaction fails, rolling back is crucial as it undoes all operations performed within the transaction, thus preventing partial updates that could leave the system in an inconsistent state.

This approach is particularly important in scenarios where multiple dependent changes are required. If one change fails and the rest are committed, it could result in data discrepancies and integrity issues. By implementing a rollback, the system guarantees that either all operations are completed successfully, or none at all, thus protecting against data loss and maintaining a high level of data consistency.