Can I apply it to songs I do not know?
This is just like asking: “Can I score ‘A’ or top marks for a subject I did not study to get familiar with?” No? That’s precisely the point. Strictly speaking, nobody can, nor wants to play songs they don’t know.
The intention of the question can be rephrased in 2 possible ways:
“If I can’t read notes, then wouldn’t it be to my disadvantage if I am given the score sheet?”
The mastery of reading notes is a separate subject altogether. Although the Play By Ear™ Method gives some knowledge on musical notation, the emphasis initially is towards using your sense of hearing and feelings to make music. The use of musical notations comes later when one has become more musically adept. In fact, this method is really useful for the auditory and kine-aesthetic type of people. If you want to play by reading notes right from the beginning, we recommend that you sign up for theory classes. In fact, it is better that you take up theory and Play By Ear™ at the same time!
“Can it be applied to songs I have heard before but have not come to the stage of being totally familiar with it?”
NO. It can only be applied to songs or part of songs that you can, at least, visualize, hum or sing/vocalize. Just like in the real world where you cannot hope to score top marks for subjects you are not totally familiar with, it’s no different for music. Similarly, by conventional means, neither would you, as an amateur, be able to properly play a complex classical tune you have never heard before without frustration. You will be hard put to interpret it unless a trained person (e.g. teacher) helps you out with the interpretation. And that works best when the teacher repeatedly performs that song for you.
Simply put: “You cannot actualize what you cannot visualize.”