The coach says Garlett, who had missed a match two weeks ago because of a glute injury, was made to return through the reserves last weekend to show he was "back in touch with reality".
Garlett has been recalled to the Blues' side for Saturday's critical clash with Port Adelaide at AAMI Stadium.
Malthouse explained Garlett's banishment to the VFL last weekend cryptically, saying he would "never ever let the tail wag the dog".
"He was injured the previous week. The facts are out there and they're right, that it was a disciplinary issue (why he was left out last weekend)," Malthouse said on Friday.
"I never ever let the tail wag the dog.
"It was a recommendation from the playing group, from the leaders that they spoke about the issue.
"We'd already spoken about it as a match committee and our best advice to the playing group and to Jeff was that he plays in the reserves and proves that he's back in touch with reality.
"He went back and played a very significant game."
Malthouse said the issue had now been resolved, paving the way for Garlett to return to the senior side.
"I'm not about to go through the pros and cons of what did take place - let's just leave it at that," Malthouse said.
"He's a very valued person, a very valued player. The playing group were very aware of it and it's been resolved."
Garlett is one of three inclusions to play Port, along with ruckman Matthew Kreuzer and Andrew Walker returning from injury and illness.
