Many guests cancel reservations beyond the cancellation date for reasons that don't rise to the standards necessary to receive a refund; perhaps their plans change, they become ill but did not take insurance, or they're unhappy with the property. The current cancellation policy allows no recourse.
I owned a 10-room bed and breakfast for 10 years. When guests had to cancel, I would immediately put the room back into inventory and if it rebooked at the same rate, refund them. The idea of taking money from two guests for the same room made me sick. I just couldn't do it. I think AirBnB should require the same of its hosts.
Also, AirBnB doesn't allow for advance cancellations once the reservation has begun. For example, if a guest arrives for a one-month stay but after arrival their plans change and they have to leave for two weeks, if they cancel immediately, the property is not blocked until their departure but becomes immediately available. This greatly reduces the host's opportunities of re-leasing it.
I'm leaving a property midway through a three-week stay and have an understanding host who will block the property on the calendar for the nights between when I cancel and when I leave, and who will refund me if he rebooks it.
This should be standard practice at AirBnB. There is no reason it shouldn't be.
David