A Kara cancel is the canceling the startup of a move into another move. This name comes from the Japanese word 空 (kara), which means empty or sky. You are canceling the startup of the first move such that it never comes out (and thus empty).
At this point you may wonder why can you cancel the startup of a move? Developers put this into the game to act as a way to make special attack inputs a bit more lenient. For example, a player mistiming a Template:236 as Template:236~. The window to kara cancel these moves usually isn't very long (usually 2-3 frames).
Competitive players have found more advanced applications for this by finding specific moves with certain properties that would benefit another move.
- Ragna 5B > Throw
- Ragna's 5B moves him forward during the startup. By kara canceling the 5B into a throw, you are giving Ragna's throw more range.
- Ky Air dash > Ride the Lightning > YRC
- Ky's Air Ride the Lightning stops his momentum during startup. By kara canceling the Ride the Lightning into a YRC, Ky can stop his forward momentum and fall straight down. This is useful by allowing Ky to create crossup attacks
- Yosuke Glide
All these examples are character specific, but they all use the same principals of kara canceling.