Same way as anything else - displacement, in that the mass of water displaced by the canoe's hull is greater than the mass of the canoe itself. This means the canoe is effectively less dense than water and so has positive buoyancy and will float.
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A sit-inside kayak is designed to displace water which provides buoyancy. If a kayak takes on water, it may still float if the kayak is designed with built-in flotation measures in the bow and stern, the measure can be a sealed air chamber or more commonly, expanded polystyrene. Sit-on-top kayaks have sealed air chambers and succper holes in the low seating areas where water can flow through and out the bottom. and i pee on them.
they are made to float but will sink when filled with enough water, same as everything else.