@Gillian166 I've always used moderate myself and never found it a problem. Only once did I have a guest cancel after the 5 days, and that was an odd circumstance. She was coming from Europe, had booked a few weeks ahead and she wasn't answering any of my messages asking if she had received the map I had sent her (my place is impossible to find without it) and asking for ETA. Finally I asked Airbnb to try to contact her and it took another 2 days until they managed to. Then I got a very apologetic message from her, saying a close family member had died and her whole trip and bookings were off the table- she hadn't even had her phone turned on and her bookings were the last thing on her mind.
Otherwise, most of my guests are international and have flights booked, maybe booked surf or sailing lessons here- there are too many things in play for them to cancel last minute.
I also considered what policy I would be willing to commit to if I were a guest, and moderate seemed reasonable to me. And I wanted to avoid pleading or irate messages from guests who had booked with a strict policy, upset or angry because they wouldn't get any refund at all.
Your guest didn't get 50% back, they only got 25% back- they had a 2 night booking, paid in full for the first night and got half back for the second.