How does a canceled passport prevent one from traveling?

Without a valid passport, no other country will admit him. Obviously that isn't on his passport, but there are a couple of things that will give him problems if he tries to leave the US:

a) machine readable passports are commonplace now (only foreign nationals with them are allowed to use the Visa Waiver Program) and if it is scanned at passport control in another country it could show up that way

b) the information will have been passed around by Interpol, which will facilitate a).

But the main thing is that all US ports, airports and other border posts will have been informed, which will make it extremely difficult for him to leave the country.

It will indeed prevent him from traveling anywhere. But the canceled passport will not be the only obstacle. Every America friendly country will arrest him now and deliver him to the US. So his choice of safe destinations will be limited forever.

But as long as a country declares that he will be welcome he can go there as long as he does not get within reach of any other authorities.

Its a formality mostly. The countries where he touches down won't care about his passport, but if that plane he is traveling on encounters some kind of problem and lands in a country friendly to the U.S. then he'll have problems.

Contact your embassy and complain them regarding the seizure or illegal or forced possession of your passport or contact humanitarian organisations and make an appeal to them for help. The concerned embassy or the Government will definitely help and you can get back to your homeland.