Confusing and useless as usual.
Dealing with Airbnb leaves me perplexed, it's like they want everything to have maximum potential to blow up in everyone's face.
Airbnb you rocket scientists, try this:
Flexible: Cancel anytime with full refund
(Airbnb gets no fee either, grow up, you use less resources in a cancellation than any other involved party, basically an infinitesimally small amount of bandwidth.
Moderate: Cancel anytime with 50% refund.
(Airbnb gets 50% service fees, what good for the goose good for the gander)
Strict: Cancel anytime, zero refund.
Never call hosts and ask them to refund despite the chosen policy. Every time you do this it's in bad faith and damages your relationship with host community, just stop. If you really think an exception merits a special exception refund, do it out of your own billion dollar wallet.
EZPZ as we say IRL. If guest still wants to call in and complain, offer them that $200 arbitration option and gently remind them that the bare minimum from a "good guest" is to read listing terms. Save about 90% of your CS costs and end the number one source of host frustration, instantly improving the quality of all bookings for pretty much nothing.
Airbnb, if you don't understand that host patience is a finite resource, you have learned zero about your market.