It depends upon what you are canceling. For instance, if you book a rwo bedroom lock-off, you can not cancel the one bedroom or studio portion of the room and keep the other portion without making an entirely new reservation, based upon availability.
If you are talking about simply dropping some nights from an existing reservation, yes, you can do that without penalty as long as it is at least 31 days prior to your schedulaed arrival at the resort. The points will return to your account in the current use year. They can be used or banked, as long as you are within you normal banking window.
If you cancel 30 days or less from arrival, the points will go into a holding status, they can not be banked and must be used for reservations made no more than 60 days prior to arrival.
If you cancel on your schedulaed arrival day, all points are considered used, and they are lost.
The above rules apply to reservations at
DVC resorts only.
If you are changing a reservation at a non-DVC resort through the Disney Collection, the points will be "reservation points" and will have to be used for that type of non-DVC reservation, not a DVC resort reservation.