I. Leader Groups (Land and Naval)
First, there are two groups of leaders, Land and Naval. While you can put land leaders in naval groups, and naval leaders in land groups, they do not provide any benefit. So, lesson 1, keep Land leaders in Land groups, and Naval leaders in Naval groups.
II. Leader Ranks
Next comes the three ranks (both naval and land have three ranks, 1*, 2* and 3*, currently only 2*& 3* for Naval are used). The ranks primarily denote how much CP (command points) the leader provides, but, there are also other benefits to be dealt with later (special abilities for generals of particular ranks).
A 1* General will have in their NATO symbol a single star
A 2* General will have in their NATO symbol a group of 2 stars
A 3* General will have in their NATO symbol a group of 3 stars
A 1* Admiral will have in their NATO symbol a single anchor
A 2* Admiral will have in their NATO symbol a group of 2 anchors
A 3* Admiral will have in their NATO symbol a group of 3 anchors
III. Statistics
Each leader has three statistics, Strategic, Attack and Defense.
A) Strategic - This is vitally important to denote wether or not your leader is active that round. Either a general is active or not, and the value of the number denotes the chance that the leader will be active (the higher the better). A leader of 1 strategic will rarely be active, 2 will not be active often, 3 will be about 50-50, 4 will mostly be active and 5 greater will probably always be active.
If a leader is active they are able to do specific tasks (move without penalty, provide the CP they have, as well as some abilities requiring the general to be active in order ot use).
B) Attack - This is critical, as the value provides a % bonus for forces attacking. Each value of Attack adds the % bonus to the force.
C) Defence - This is critical in relation to attack. Defence values of a defending general are used to subtract from the value of the attacker. This purely lowers the bonus of the attacker (max to zero). For example..
Attacker - Attack value of 2
Defender - Defence value of 1
Attacker - Defender = New Attacker Value (2-1=1)
However, a defender can only reduce an attacker's value to 0 (no % benefit). For example...
Attaker - Attack value of 2
Defender - Defence value of 3
Attacker - Defender = New Attacker Value (2-3=0)
This may appear that a defending general with a high defence value is useless, but, when up against a very good attacker having a very good defender can negate pretty much (if not all) of their ability.
IV. Abilities - Each general (barring generic replacements) will have at least two abilities. Abilities are defined by general rank (special rank abilities) as well as role, personality and history.
Abilties can function by a series of requirements.
A) The leader is the top ranking and top seniority in the stack (i.e., ability will only trigger if the leader is the first in the stack, located at far left). These are LEADER abilities.
B) The leader is in the stack, but not necessarily the leader of the stack (abilities work in either role). These are GROUP abilities.
C) The leader is attached directly to another combat unit (abilities work only to elements directly attached). These are UNIT abilities.
In the stack below, von Reyher is the leader (given he has greater rank than Schrekenstein and Moltke, and greater seniority than Wrangel).

As leader, Reyher will apply his leader abilities (in this case, Diplomatic), while no other leaders in the stack will apply their LEADER abilities. However, all four generals, if they have them, will apply any GROUP abilities. Given that no leader is attached to another combat unit, no UNIT abilities would apply.
Further Details on the roles and usages of the three key ranks to follow...