Ok I'll explain with an example: say you have set medium cancelation policy, and a guest is arriving tomorrow for a one week stay. But on this day, less than 24 hours before check-in, the guest sends an alteration to cancel the first 6 days of the trip, leaving all but the last night. They are apologetic and have a good reason. You now have 3 options: accept the alteration and risk high likelihood of unsold nights, deny the alteration and make them pay, or as I see it, the best way is to apply the cancelation policy, where they pay for 100% for the first night, then 50% or the remaining 5 nights, and if you get rebooked, you might actually make more. Yes you can decline and manually work out the new price, but that's very inconvenient and prone to mistakes. It'll be much easier if all alterations that remove nights within your selected cancelation policy is automatically applied and you simply hit accept.