@Lisa723 @Helen3 @Colleen253
Thank you for your responses!
In the situation above, the guest cancelled and in spite of my "strict" cancellation policy (which, frankly, I didn't realize was so strict!), I refunded the money that was otherwise due to me. I did this because she cancelled just a couple of days after making the booking and the booking was for August 2020 (I would normally never intend to lock in someone so far in advance).
However, the potential guest also has a fee payable to Airbnb and I am helping her get that refunded. Why you may ask?! She's Australian, I am a New Zealander, and she was open and upfront with me. Also I am intrigued at the process especially the further I get into it (still learning how things work in this forum etc. etc.). I have been a host since 2011 or so but previously it was for an apartment in New York that was not dependent on seasons etc. People booked and showed up a month later. I never needed any issues resolved or needed to ask the community. Now my rental is a beach house so there is a season and houses fill reasonably fast around this time of year for a stay several months away. A different model altogether!