If Milley did something that he felt necessitated the acceptance of a presidential pardon, then he probably did something really bad.
Not going to speculate on exactly what he did, but if you have been paying attention you likely already have a good idea.
The military doesn't mess around with felonies; if the rumors are true, a demotion to private and/or a dishonorable discharge may even be within reason.
Any military demotion might actually end up being the among the least of his concerns by the end of the investigation into his alleged misconduct.