'Cancellation' means to divide the numerator (top) and the denominator (bottom) of a fraction both by the same number.
That operation is used to 'simplify' a fraction (reduce it to lower terms). When there is no number that goes into both the top and bottom numbers, then the fraction is in simplest form (lowest terms).
If the top left numerator is negative and the bottom right denominator is positive and the same number, you can cancel them both out, and create one fraction by putting whats left on the new fraction line. And it can go the same way with top right and bottom left. Same thing for both. Then once you have one fraction, simplify it til it's as small as it can go.
