Leukemia is a type of cancer.. so if it is then how does bone marrow stop the cancer?

Two Ways: Bone marrow transplants help cure aggressive leukemia in two ways. First, it allows doctors to give high dose chemotherapy and sometimes total body radiation therapy therapy that have a higher chance of killing every last leukemia cell. Second, it essentially gives the patient a new immune system that will hopefully recognize and kill any remaining leukemia cells.

Leukemia: Is a malignancy of the bone marrow itself. The bone marrow is usually a mixture of many different cells that make up your blood cells. When one cell line is malignant, it takes over and grows preferentially crowding out all the others. Chemotherapy will kill off the malignant clone, but if the normal cells don't regenerate, patients need a bone marrow transplant to function normally.