The only leaders in AACW are generals; both names are synonymous.
Each turn a d6 die role is made for each leader/general to determine if it is active. If the dr is <= the leader's strategic rating it will be active. So a typical 3-1-1 leader will be active about 50% of the time. This dr is modified by whether the leader was active in the previous turn or not. If it was there is a greater chance that it will remain active; if not there is a greater chance that it will remain inactive. I'm not sure if the dr modifier is +1/-1, but it probably is.
Success in AACW will depend very greatly on leadership specifically because of the activation rules, but also because of the advantages of the rank and offensive and defensive values of leaders. Good leaders (high strategic, offensive and defensive ratings) will nearly always win over and equal force lead by a mediocre or poor leader. This is what poses the Union the greatest problem during the first two years of the war. The decent to good leaders can be counted on one hand.
Although it will be difficult as the Union to attack with poor leadership, even the mediocre leaders will defend almost normally when inactive if they are defending in a region they control. The 35% power penalty does not apply in this case.
Starting in '63 the Union will start receiving its other good leaders. The Union player must be ready for this and put them in charge of divisions and corps ASAP. Once these generals start fighting and winning battles they will not only gain experience and quality, but also be offered promotions. A good corp commander can lead a number of mediocre division commanders pretty well.
Once one of these new, good leaders (Grant, Sherman, Meade, Reynolds to the greatest extent, but also Kearny and Lyon get promoted to Lt.Gen. you can put them in charge of an army and pass their good rating not only to the units in their own stack, but also to their subordinate corps. At this point the face of the game will change greatly.
For the South the problem is that you already start the game with almost all of your good leaders and need to rack up your victories quickly to keep Union morale low or break it altogether and increase your victory points. VPs affect your income and recruiting. The higher the better, of course.
Two more points.
1) Before you ever promote a leader, look them up in bburns9's List of Commanders Union and Confederate to be found here Updated Generals Lists 1.15 Legacy Patch
. This is a must, because many leaders when promoted LOSE
some very good parameters.
2) Protect your army commanders. Every leader active in a battle has about a 2% chance of being killed, be it a division commander or the commander of your army. Let your corps do your fighting if at all practicable.
Off you go now and have at 'em.