I have done it both ways. Told the guest to cancel the request and request again with the correct number of guests and told the guest I would accept the request but then would send them a change request to the correct number of guests. I would not do the second option unless the guest had messaged me back and agreed to accept the change.
The second way is more secure for the guest. If they cancel and try to rebook then another request could sneak in ahead of them. I have had this happen. I was having a discussion with a guest (an inquiry.) During the discussion a request came in. The site wouldn't let me decline the request or preapprove the inquiry. The two things blocked each other. I had to call Airbnb to fix the situation.
The first way is more secure for the host. You are not accepting a reservation you know is incorrect.
Either way if the reservation is for just one guest then you don't need to allow the others to stay so the guest is going to have to either cancel completely, cancel this and rerequest, accept your change or stay only by themselves.
