This is really an unfortunate decision and definitely one of the saddest days in ESC history considering ESC is seen as a beam of happiness in ESC fans. But in the grander scale of things, Eurovision is not the most important stuff (though some may argue), and I think at this point in time where things are really uncertain, the cancellation decision is inevitable considering all the logistics nightmare/huge costs that will involve if they postpone the contest for an indefinite period. There are too many things at stake and uncertainty, so I guess this is the "best" decision considering all factors.
However as many of you point out, I do feel an outright cancellation at this point is not ideal since the purpose of ESC is to unite people through music during difficult times. For me, I still think an alternative edition of the contest should still be held, we or the artists may not get the full experience, but at least it is something for all us to look forward to in this gloomy times.
I have always thought that a pre-recorded 'live' performance kind of contest should still be held. Artists can perform their song in their home country's studio and submit the pre-recorded 'live' performance to EBU panel to vet through. I know different countries have different studio capabilities and standards and it is hard to ensure every participant is given the same quality of platform to perform. Therefore, it will be unfair and at a disadvantage for the countries with lesser capabilities. To me, at the first place, there is no such thing as fairness. EBU just need to set up a special criteria for the delegations on the pre-recorded 'live' performances. And there will also be a special one-off criteria catered to this special edition for the jury to judge. The winning country for this contest can host the semi-finals in 2021 while Rotterdam can still host the finals in 2021 (a joint-hosting between 2019 and 2020 winning countries). Oh well..
As to what will happen to the artists and songs for the 2021 edition. In my opinion, I still think EBU should recommend all delegations to invite back the same 41 artists (and allow them to use the same songs). People may say, it will be well over 18 months and the songs may have lost the flavour etc. But the thing is that we have never seen the songs performed in full glory on ESC stage. I think that alone is the game-changer since 2020's entries are diverse and there is no clear winner. If the artist themselves decided they do not want to partake in the contest or want to change a new song, that should be allowed too as long as there is enough time for the delegation to find a new replacement (whether it's a new artist or a new song).
And also, the question about the NF (especially those that are specifically set up to find the representative of ESC), as much as I think it's unfair for 2020 winner of the NF to get replaced, but the prerogative should still be very much left to each broadcaster to decide. My only solution is that they change the format where the 2021 winner of the NF will be the representative of the 2022 ESC and going forward. But that will then cause another problem of the winning song being announced way earlier for the contest.
If not, the ultimate solution is to have 2 editions in 2021 (that of course is if the situation has resumed to normal).
One in the beginning of the year (to allow the 2020 contestants to compete) and another towards the end of the year. It will be chaotic definitely, but it will be ESC heaven for all ESC fans. But the winning country of both editions will then have a shorter time to prepare for the end year 2021 and 2022 editions.
I think I am rambling on. All in all, I just hope the 2020 artists will come to terms with the news and hopefully most of them will be back (regardless with the current songs or new songs). All of them deserve the chance to come back regardless whether they or their songs are well-liked by the fandom.