Miles was not an NBA player this preseason, plain and simple. He did not have any of his explosiveness back, and without his explosiveness, he just was not good enough...especially given his contract status compared to the rest of the roster.
Now, he may be an NBA player now, I don't know, but it wouldn't have made much sense for them to keep him at that point, unless they had very good reason to think he was going to improve by leaps and bounds by the end of this season...which I hardly believe there was reason to think.