@Denise1328 in order to release the calendar dates for re-booking, you must ask the guest to complete the cancelation process. Don't do it yourself - hosts are penalized for this. If you'd like to offer a refund beyond what your cancelation policy defaults to, wait until the cancelation is confirmed, and then you can go to airbnb.com/resolutions and select "send money. "
Be aware, though, that if the guest reports to Airbnb that they have Covid, they can override your cancelation policy and grant a full refund under Extenuating Circumstances.