I guess before we talk about how to do this we need to know what it is.

"Death Cancelling" is a very important technique to learn and understand in the speedrun. It is the ability to heal whichever party member the player had control of despite them taking fatal damage from an attack that stops all action.

For much of the game you're going to be way lower level than the enemies you encounter. This means that strong unavoidable full screen techs can outright wipe your whole party with more damage than your party has hp. A good example is the image below of the Nightblade's Split-image Slice.

You can see the damage done here is even higher than the characters' max hp. Seems like a cheap unfair mechanic thrown at the player (especially considering it's random whether they happen or not) but you are able to cheat death with this simple trick. So here's how to do it:

Step 1) Spam that menu button. This goes without saying. Pay attention to which character the menu surrounds. This is the character you will be healing (death cancelling).

Step 2) Use the L/R button to swap to a different member of the party. Either will work though in this case Carlie was already dead beforehand so it must be Kevin.

Step 3) Select a healing item (any of them will do) and use it on the character the menu originally homed in on when you opened the item menu (which in this case is Lise).

Follow those steps and you'll know the trick worked successfully if the character you attempted to heal actually gets healed despite taking fatal damage that should've resulted in death.

So why are these last couple of steps so important? Because unfortunately, a character cannot death cancel themselves. So while the target that needs to be death cancelled in this case is Lise, it cannot be Lise herself that uses the healing item to death cancel or the trick is guaranteed to fail. The healing item must be used by a character you DIDN'T have control of when fatal damage occurred on the character you DID have control of. So for this particular case I'm showing, it must be Kevin who uses the healing item on Lise.

It is important to note that death cancelling does not work on everything. Some good examples are Death Spell and regular physcial damage. It also will not work if you can't control another character within the item menu other than the one you currently control so make sure that the party stays relatively close to eachother (enough to stay on-screen despite knockbacks) and try to avoid using L/R to "A.T. cancel" if you expect a fatal full screen spell/tech to occur.