Cleary's role had been slipping the past few games after going a combined 8-28 from the field in back to back losses against Ohio State and Minnesota at the end of January and then the team put together back to back wins @ Rutgers and Indiana while he was out with a concussion. For instance, he had 0 points in 14 minutes in a loss @ Northwestern eight days ago. My guess is that it likely boiled over into arguments/insubordination and hence, a dismissal.
While it lowers whatever ceiling Penn State would have for the rest of the season, this could very easily be a short-term "addition by subtraction" and rallying point for the remaining players in the short term, so gotta come out focused.