A kara cancel is a cancel performed by canceling an attack that doesn’t hit or get blocked into another move. The name comes straight from Japanese, where the term “kara” in this case means “empty”, or rather “whiff” in game lingo. Hence, the term “whiff cancel” and “empty cancel” are also seen once in a while.
In the English terminology, this almost always refers to using it specifically to advance in a very specific way (see “Slide/warp kara” below); in Japanese, it refers to the generic mechanic that allows this to happen, as it is technically a kind of cancel, in which there is reduced recovery, or none at all.
At far range, by whiffing a normal move and putting out a projectile, thus staggering the timing, it can make things tougher to dodge; it can also be used to put out a low move, shifting the opponent’s focus to crouching block, then unexpectedly put out an overhead move (or perhaps the other way around), in order to do basic mixup.
In particular, this is a technique characteristic of play in the King of Fighters series.
Originally in KOF ’94and closely-related KOF ’95, if an opponent is in blockstun, a throw will not come to be, nor is there a miss animation for missed throw attempts. Thus, canceling a normal move with a command throw in these games, would allow one to eliminate the recovery of a normal move. This made overwhelming combos and strings open to characters with command throws.
This term in Japanese (damashi cancel) was used since ’96 in magazines like NEO·GEO Freak, and until the term “kara cancel” came in vogue, this is what it was generally called. This was around the time of KOF ’95, so even as with projectiles as mentioned above, this technique was known as the trick cancel to Japanese players, and was even used as the formal name in mooks.
Furthermore, this technique existed in Samurai Shodown II, and was mainly used with Hanzō’s Mozu Otoshi, so it was also known as the “Mozu cancel” at the time.
Highly characteristic of Street Fighter III gameplay, this is what the term most often refers to in English.
One particularly essential point for using these is when one is performing a juggle; the juggling hits need to be performed at an exact range, and in many cases, it isn’t possible without a kara cancel.
Less often, you may use one of these to cancel something that retreats, which can evade throws and such, much like Dudley’s Short Swing Blow does.