The clutch is only actuated when changing between gears. Engine braking happens when in gear, and at that point the clutch plates are compressed together and sp

The clutch is only actuated when changing between gears. Engine braking happens when in gear, and at that point the clutch plates are compressed together and spin as one unit - no dust being generated. Any significant slipping of the clutch would make it burn up very quickly, since cars use dry clutches which cool down by radiating heat into the air. Engine braking happens because engines have very high internal resistance - with motorcycles for example, there's no parking brake, you just leave it in 1st gear and it will not roll. So when you're not on the throttle, the inertia of the wheels/drivetrain will keep the car moving and the engine RPMs from dropping to idle instantly, but over time the engine will drain that inertial energy and slow down the car. Also, engine braking is pretty weak on modern manual cars AFAIK. At least in my Honda Civic it basically doesn't engine brake, compared to my motorcycle. The effect is there but very minor.