a lot of the Olympics is reputational/promotional, for the city and by extension the country. Montreal lost money heavily. Atlanta made themselves look hopelessly incompetent. Barcelona's popularity was hugely boosted after staging them.
London didn't need such a big boost, since Britain is already famous for staging medieval processions, royal weddings and so forth; none the less, it ran smoothly after serious hiccups involving Group 4 and booking arrangements. Though I suspect some dodgy dealing in unloading the main stadium, it did a lot to regenerate east London; the fast trains from St Pancras are still going, wheelchair access to the tube was imnproved etc etc - little things as well as big. Many prople prophesied doom and disaster (New Judge was particularly confident we were all going to hell) but it went well and cheered people up.
Contrariwise, cancelling the games would inflict severe reputational damage on Tokyo, and it would be pointless: athletes, if healthy, can still compete; cameras can still broadcast them to their countries and the rest of the world.