Alli looked on as an unused substitute at Wembley as the Three Lions played out a 1-1 draw with Italy.
Following a shaky defensive showing in an opening to the game Manchester City centre-back John Stones will be keen to forget, England stylishly took control of the contest and led when Jamie Vardy lashed into the top corner after 26 minutes.
A rampaging Raheem Sterling and the quick-thinking Jesse Lingard were the architects of that goal and they, along with Alex Oxlade-Chamberlain caused Italy numerous problems in the area behind the striker where Alli thrives at his best.
The 21-year-old has often fallen short of those levels this season, however, and Southgate chose to give Adam Lallana an outing as the Liverpool playmaker builds back towards his best and hand Bournemouth's Lewis Cook his international debut, with Alli overlooked.
"From the middle third of the game onwards, I thought we were a massive threat, far more than we have been in previous games," said Southgate, who oversaw a 1-0 win over the Netherlands in Amsterdam last Friday, where Lingard scored the winner.
"Alex and Jesse were bright and sharp. Alex made really good runs and Jesse took up really good positions. His link-up play with Raheem was a real threat.
"And Raheem, in that position off Vardy, when you've got that dribbling ability in the middle of field it’s a different threat for the opposition."
Pressed on Alli's omission, Southgate explained fitness niggles during training played a part in his thinking.
He added: "First and foremost he's an important player for us, no question. In training he's not been able to finish all of the sessions with the problems that he's had.
"It was important to get Adam in as part of his rehabilitation. And we wanted to give Lewis his debut
"Dele always wants to play and he will be disappointed but he's very important player for us."
Lorenzo Insigne hit a late equaliser from the penalty spot after England debutant James Tarkowski was found guilty in an unfortunate trial by VAR but, overall, Southgate is confident his youthful squad are on the right track.
"We'd love be ranked third in the world and all our players with 50 caps. Everyone knows the history of the last few years, I don't need to go through it," he added.
"In terms of the last four games we've played four of the biggest football countries in the world – all at difference stages in their development. We've been competitive in all games and our patterns of play have become clearer.
"What really pleases me is the guys are solving problems on the pitch themselves at times – changes in formation from the opposition, different pressing strategies
"That will only improve the more we work together. I'm looking forward to getting them together as a group and going into what will be a really exciting tournament for us."