I'm a new host. Just had my first guest cancelation and I'm not sure how this works. He booked instantly on 9/23/20. The stay was 9/25 - 9/28/2020. He canceled 25 hours prior to check in.
It looks like you have the Strict cancellation policy set, so the stay is non-refundable since they booked less than 7 days in advance. You should get the full payout on the 2nd day after the guest was due to check in. The stay dates should become unblocked. You don’t have to do anything further.
If you go to “Reservations->Canceled” on the desktop version of Airbnb, you should see the status of the reservation and the payout amount.