@Coco108
The guest can not cancel under Covid-19 external circumstances (as the policy shows quarantaine is excluded), so the guest has to do normal cancel. The strict policy will decide about refund, but if within 7 days before check-in, there is no refund (except cleaning fee).So then you have to manually refund the guest via resolution centre. But Airbnb service costs are not refunded by Airbnb.
You can contact Airbnb and explain situation and ask Airbnb to do the cancellation penalty free for you, and then the Service costs are also refunded to the guest.
Otherwise you need to cancel yourself, so guest will have full refund including service costs, but penalties aplly for you
But after that you still can try(!) to file a claim for extenuating circumstances, just to get rid of penalties
Added: if your on Instant book, maybe other options available to cancel (I do not use Instant Book, so maybe other hosts can advise)
Best regards,
Emiel