Insigne has taken some hard shots to his surgically-repaired right knee over the last few weeks, and had to leave his last two matches because of it. He was held out of training on Tuesday because he needed to have fluid drained from his knee, then was released from international duty Wednesday when the troublesome joint wasn't improving enough.
This is, again, not especially surprising. The fact that Insigne had gone so long after returning to the field without a setback was something of a minor miracle, and in the grand scheme of things this doesn't seem to be a significant setback. By all accounts, this is more or less his knee getting beaten on and saying "HEY! I just got rebuilt 10 months ago, stoppit!"
It doesn't sound like there's been a significant re-injury -- no one's even thrown around more minor issues like sprains -- so Insigne resting back at home and getting treatment from Napoli's team medical staff will likely have him set to play in time for Napoli's next match. In other words, this sounds 100% precautionary rather than something to get significantly concerned about.
Insigne's spot in the national team was replaced by Milan midfielder Giacomo Bonaventura, who hasn't enjoyed nearly as strong a season as Insigne has. In point of fact, Lazio and Italy midfielder Marco Parolo bemoaned the fact that Insigne had to leave the squad, pointing out that he's been in fantastic form and that the team would have been stronger with him. Of course, he also took the chance to put forward the usual platitudes about "the team needs to be stronger than the individual" and so on and so forth, but looking at the form of who's in Italy's attack, it's hard not to see how he'll be missed.
Get better soon, Lorenzo. Napoli and Italy need you.