Let me give two examples from two different pillars.
First, one of my classmates who were offered the right to retest after being academically separated for failure in military movement, one of the DPE courses. This cadet had been extremely weak physically, filling the role of "that new cadet" who couldn't keep up running or do anything to help the squad physically. When you looked at this cadet at the end of our plebe year, the typical sentiment was this cadet would not be able to fulfill the role of being an Army leader because of the failure in PT. Why would anyone follow someone who couldn't take care of themselves? This cadet went home that summer, with that academic board serving as the kick in the butt needed, to completely change their lifestyle. Upon graduation, and now having been a PL and XO in the Army, I don't know many of my classmates that are better, more effective leaders than this current officer in our year group. That cadet took the wakeup call, got in shape, and more importantly, learned a lot about how to help others finding themselves in similar positions so they can develop their own subordinates and make the unit better. Under the old model, this cadet would've been kicked out, no questions asked, and the Army would have lost a great leader, the time, and the cost of training with absolutely nothing in return.
Second example, I know a cadet found on honor second semester their firstie year. The decision was to give this cadet the Army mentorship program versus separation and requiring him to pay for his schooling. As a result, this cadet went out into the force, had to learn some incredibly hard lessons, deployed, before coming back to school and graduating. The experience was an extremely humbling one for him and from what I have seen, has only made him a better person and better leader for it. The point being, this cadet was given the chance to redeem himself, and now the Army only has a better product than they would've had they just decided to cut him completely. Both of these stories are just anecdotes, but hopefully they serve as a snapshot into the reason why the developmental model exists.