Ultimately it's about the ballistic coefficient. You want high mass, low cross-sectional area, and low drag coefficient (Cd). With propulsion for station-keeping, it's challenging to capture the VLEO benefits with a regular cubesat. That said, there are VLEO architectures different than Clarity that make sense for other mission areas.
Yes it's a big contributor. The atmosphere in VLEO behaves as free molecular flow instead of a continuous fluid.