Hi @Safet0, I see that your cancellation policy is strict, so that is that. If you should choose to offer refund it is up to you but not part of the policy. You don't have to refund anything. You could offer insect repellant perhaps?
They seem to be extremely unhappy guests and best to let them leave, to keep them happy I would ask them to cancel (do NOT cancel yourself, you will be penalised and the guest rewarded) so to free up the calendar in case you can get a last-minute booking. Tell the guests that you are only too happy to refund in full for the remaining days should they get filled, otherwise not. Up to them if they wish to leave or not. If they leave and do not cancel the calendar will not be freed up and they will not be able to get a refund.
I don't think your listing is misleading, it seems like a basic apartment at a low price. Not sure what they expected? Since you are close to hotels, restaurants etc I imagine everyone else manages to drive on the road.
I would be polite, reasonable and firm.