I obtained this information from CA for my guide. Since it's still a way from publication I thought I'd share it now.

“Generals’ command stars relate to the morale bonuses a general gets. There are two bonus, a nearby bonus which is big but applied only over a certain distance and an alive bonus which is smaller. Both are increased as a general gains command stars.”
Thanks to Lusted and Craig for providing the info.

If you want to spread the news around the community please mention the source so people know it's solid.