@Anthony608 I don't understand. How can you have advance notice set, yet also be open to same day bookings? Those things are mutually exclusive.
Aside from that confusing discrepancy, as for declining, if you have advance notice set, a guest can't send a request for a same day booking, because they can't enter blocked dates. They would have to send an inquiry instead, where they would have to enter open dates, but could inquire about any dates they want to.
But you don't need to decline an inquiry, ever. All you need to do is message back.
And no, declining a request doesn't count as a cancellation. It's just a decline.