You cancel a PO when the goods or services are no longer required.
This is from the user guide for Final Close: Prevent modifications to or actions against completed documents, lines, and shipments by final closing them. Final-closed documents are not accessible in the corresponding entry forms, and you cannot perform the following actions against final-closed entities: receive, transfer, inspect, deliver, correct receipt quantities, invoice, return to supplier, or return to receiving. You should final close documents or their components only if you are absolutely certain that all desired activities have been completed; you cannot undo a final-close action.
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You need to understand it from the Functional Perspective.
Final Closure of your Purchase order: Is a functional representation of the official closure of the transaction between the consigner (Supplier) and the consignee (Buyer). If the quantity is not fully received or supplied and PO is finally closed, it represents a short closure of the transaction.
Cancellation of Purchase Order: This represents, termination of the transaction (see the difference in terminology here) between the Consigner (Supplier) and the consignee (Buyer).
Every purchase has three elements, legal, operational and financial. In legal terms, these transactions are vastly different, termination v/s closure.
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