When you see that little discount box and click on the "Get details" link it says:
"By waiving the host’s cancellation policy, the guest is assigning their refund rights against the host to Airbnb in return for a discount on the total booking amount."
So, in the event of a cancellation, the host should still get the same amount irrespective of whether the guest opted for the discount or not. If the guest cancels, having opted for the discount, Airbnb will keep what would otherwise have been refunded to the guest.
I presume that they've calculated the discount % so that the average refund which they keep will more than compensate for the amount lost to them in discounts and the salaries for the mathematicians they contract.
If it helps, as a side effect of earning more for Airbnb, to reduce the number of cancellations it will do some good 🙂
Steve.