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Question about Hostels in Europe during the summer

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Hi everyone, I've never booked a hostel before, and i'm browsing through hostelworld right now as I want to start booking things for my euro trip.
I have several questions regarding hostels. First, there is a check-in time, does that mean I can not check in any time for the check-in time? Say I arrive in Lisbon at 10:35am, and check in time is at 2:00pm, I just have to wait until 2:00pm before I can check my things in?
Also, if check-out time is 12:00pm, that just means on my departure date I have to leave by 12:00pm, but if I want to leave earlier than that it is also fine?
Third question, there is often a cancellation policy that is 1,2, or 3 days. I'm assuming that means 1,2,3 days after booking the hostel not 1,2,3 days before arriving?
Also, I was wondering if it is generally a good idea to book all of my hostels well ahead of time (right now it would be 1 month ahead of time for me), especially since it's in Europe during the summer travel season.
Thanks !!

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