Actually, and of course I don't know the story but it could be a dropshipper whose supplier ran out beforehand and they had no way of knowing. These are drawbacks to not having direct inventory control but at least they took the responsibility and didn't give you the old worn out "our warehouses" line of bull as they attempt to make you "ask" them to cancel at which point they would've cancelled for reason "buyer asked" when in reality it was their fault, this seller took the bullet like a grown man.
I am not sure if they'll get an individual defect for each cancellation but I would think so, and I believe this can seriously impact their selling ability as well...
Be it a warning to all sellers, keep good track of your inventory and use the "amount on hand" feature of eaby as it will help you... Better to have your own inventory than to be a dropshipper who never knows who will flake out on them at the point of sale.