The Teutonic Order had undergone a significant transformation in the century preceding Albert. The Order depended a great deal on expansion and warfare against pagans both to attract new membership, raise revenues and have their conquests sanctioned. The Order had simply run out of people to convert when the Lithuanians took up Catholicism in the late 1300's and it became increasingly difficult to attract resources to fight fellow Catholics.

The politics of the Order came to resemble the secular power politics of the age and by the battle of Grunwald in 1410 it was a coalition of their formerly Catholic allies that defeated the Order in what was essentially a secular war. By 1466 after series of wars against Poland and their own rebellious market towns, the Order lost most of its land and became a vassal of Poland. There is a very good chance that this is the last time we might have heard of Prussia as anything but a province of Poland, however Albert came along and 'saved' Prussia. Already under Polish rule for about sixty years he completely revitalized Prussia by going protestant.

In making Prussia the first protestant state in Europe, incidentally under the protection of the Polish crown, Albert was able to provide an inviting destination to protestant immigrants from the Empire and surrounding areas. As a result he built universities, expanded towns and increased economic activity. Since Lutheranism was popular among the local townspeople it was an expedient political decision vis a vis the towns, especially since the local burghers had always proved troublesome to the Prussian rules. Converting to their favored religion would go a long way to gaining their support for newly minted secular Duke Albert and thereby stabilizing Prussia internally.

As for the knights. By Albert's day the number of knights declined to insignificant numbers and they were not a military force. The Order didn't revolt because they didn't have enough numbers or resources to fight both Albert and King Sigismund of Poland. Albert was able to summon the Order and simply make the announcement he was going Protestant after which the remnants of the order went their own way. Some of the knights married into the local nobility and others returned to the Empire to govern the lands the Order still possessed there.

Turning Protestant also allowed the largely German Order and local nobles to cement their status inside the Kingdom of Poland as a special region with unique laws and traditions that were separate from Poland. This allowed the Prussians to re-emerge in the 17th century as an independent state that was very German, Protestant and militaristic.

Hope that answers your question.