I think I somewhat got to grips with the mechanics of the action chain and damage being assigned/cancelled/dealt for combat and non-combat situations. But I would like to confirm my understanding:

With Nurgle's Pestilence (Action: Each unit in play takes 1 damage. Corrupted units take an additional damage), damage is applied as soon as it is assigned, so once the action chain resolved, there is no cancellation. However, what about units that have thoughness? Is my assumption correct that Toughness is a constant effect (via key word) and therefore does not require an action window to kick in? So that in the case of a Toughness 1 unit in play when Nurgle's Pestilence's action is triggered, the damage of Nurgle's Pestilence would be cancelled?

Yeah, it sounds like you have it right. Non-combat damage can be cancelled, there is just no Action window between assign and apply. So if you don't already have an effect out there that will cancel or redirect the damage (Toughness, Master Rune of Valaya, Blessing of Valaya), then there is no opportunity to play an action and save your unit, once the chain starts resolving.

Entropy, many thanks. And can I also say that I really adppreciate all the great advice you are giving here on the forum and the fabulous rules summaries you are maintaining. This makes it so much clearer and is helping tremendously to get the best out of this game. Great job, many thanks!

No problem, glad to hear its helping.