I don't think you can cancel the download. It automatically starts downloading once the car obtains a wifi connection. So there's nothing to do to start it either. The decision you have is when to install the update, once it's already downloaded.
Recent software versions have had bugs with wifi not connecting until you reboot the car...
Yes, you can cancel, at least according to the notification you get from the app. That's what I did, I tapped "Cancel update."
There's an important distinction between the
download and the
update. The download is the transfer of the new software from Tesla's servers to your car, and the update is the installation of the new software as what's in control of the car's computers. Think of it this way: The download is like downloading a new program file on a desktop or laptop computer and the update is installing that update file. Software developers have been working to make these two things into one action in recent years, especially on cell phones and tablets, where the update immediately and automatically follows the download when you use the OS-provided "app store." Still, they are distinct operations.
In the case of a Tesla, the download is done automatically, AFAIK, and there's little or nothing you can do to stop it, short of preventing your car from connecting to WiFi -- and even then, the car will still use its cellular connection to download security updates. AFAIK, there's no way to force your Tesla to download a new update early; it'll happen whenever Tesla decides it will happen, no sooner. (There is, though, an option in the car to use "advanced" updates, or some such term, which bumps you up the queue, vs. those who have this option disabled.) The update process, OTOH, must be approved via the Tesla app or in the car. Presumably this approval is required because you're not supposed to drive during an update. (I don't know if it's even possible to drive during an update; I've never tried.) Customers would be furious if the car auto-initiated an update one minute before they need to leave for work, for a medical procedure, for an airplane trip, etc. Being delayed for such things just so the car gets a software update with new games would be unacceptable. Having the update files sitting unused on the car's storage is fine in such a situation.
Note that Tesla can remotely initiate a re-install of the current software version. This can also be done in "service mode" at a service center. This doesn't install a new version of the software, though; it just re-installs what's already installed. This can be handy if something went wrong with the previous install or if some hardware has been updated -- the re-install process causes the software to re-detect all the hardware, so a hardware change will be registered in the software. I've seen claims that Tesla can bump cars up the queue for new software updates, too, but I don't know how accurate this claim is -- some people who ask for this may be confusing it with a re-install.