I am a little confused. A guest made a reservation then I offered a discount for an extended stay which confused them and they thought I was changing the dates, so they requested a cancellation. I didn't act on the cancellation. We resolved the confusion and now they do want to stay but the reservation is showing as cancelled and the dates are now blocked. How do I undo this?
You should call airbnb ASAP. When the dates are blocked it is a penalty to the host because you cancelled the booking. It is a mistake that you cancelled of course but the system doesn't know that. So call airbnb ASAP. They can help you solve the problem also you won't be penalised, loose the ability to become a superhost for a year in case you would like that.
@Mary1423 Also never ever confirm a request to cancel sent from a guest. I looks like you are the one who cancels. The guest can if he/she wants to cancel from their side without your interference.