Explanation
Changing the Work Order with a closed status of "Cancelled" allows tracking Work Order cancellations and subsequent follow-ups using reports or dashboards based on Work Order status field values[23. Re-using the existing Work Order for the follow-up allows maintaining the relationship between the original customer request and the follow-up action without creating duplicate records[24. Changing the Work Order with a status of "New" would not indicate that it was cancelled before. Creating a child Work Order for the follow-up Work Order would create an unnecessary hierarchy of Work Orders that could complicate reporting and scheduling.
References: [23. https://help.salesforce.com/s/articleView?id=sf.fs_work_orders.htm&type=5 [24.
https://trailhead.salesforce.com/en/content/learn/modules/field-service-lightning-basics/field-service-lightning-w