It does not. There was never an intention in the Bible, or from God's direction, to kill all the Canaanites. The express purpose was to drive them from the land (Ex. 23.30-31; Dt. 7.17; 9.4-5; 12.29; Josh. 13.6, et al.), not kill them. Even during the Conquest, Israel burned only 3 cities: Jericho, Ai, and Hazor. The other cities were taken over. There is no evidence the population was slaughtered; the evidence actually indicates otherwise. God was more concerned about the destruction of the Canaanite religion and idols than Canaanite peoples than of killing the people.
For example, look at Deuteronomy 7.2-3 (same book). Verse 2 says "kill them all!" But then verse 3 says not to intermarry with them. But how can you intermarry if they are ALL DEAD? You can't. This shows there was no genocide. They wouldn’t be around to marry with if they were all dead.
For further explanation, the term
cherem, usually translated as "kill them all," actually means "remove from human use." In various places in the Old Testament it refers to...
1. Inanimate objects (including plots of land): plunder (Josh. 6.17), metal objects (Josh. 6.19, 24), a field (Lev. 27.21). These things are assigned to the divine realm. It has nothing to do with killing.
2. Living Individuals (people or animals). It is implied in Josh 6.17 & 8.2; Lev. 27.28. It has nothing to do with killing.
3. Abstractions representing communities of people. The nation of Israel refers to the abstract identity of the community, not to each and every individual Israelite. The same is true of nations who inhabit the land. If cherem means “remove from use,” then removing an identity from use depends on what identity is used for. Essentially it is the equivalent of disbanding an organization. It is not disposing of the members, but disposing of enough of the organization so that there is no longer any identity as members.
4. Cities. They prohibited all human activity at the site. Cherem cannot and does not mean “destroy” because apart from Jericho, Ai, and Hazor, no cherem city was destroyed. The city was removed from use. They drove them out. After that, YHWH leased the land and the cities back to Israel. Because the land is cherem, Israel cannot make use of it for herself, but it belongs to YHWH, and so YHWH can do whatever he wants with it. What He chooses to do with His land is to allow Israel to use it, provisionally on Israel’s fidelity to the covenant.