Id say the stars mostly represent the general's skill as a tactitian. Any bonuses that a higher ranking gives to the troops (better morale and such) is purely gameplay. They have to make some kind of an incentive for a player to use a better general over a worse one. They cant make the general's AI better (which would be the most realistic) because the player is the actual general. So theoretically because the player controls everything then a no star general is just as intelligent as a 20 star general because the player controls them. So they have to make some kind of difference so they give morale bonuses. It works in a round about way.


If we're talking about experience though its completely different. Experience is your general's skill in battle and thats gained by having him on the front lines leading the charge. In my greek campaign that i mentioned before the battles i fought (and won) were so against me that i was forced to use my general in often reckless ways just to keep the enemy off balance. This often led to his entire body guard being killed off by the end of the battle but by the end of the first 4 turns all three generals had 3 silver chevrons worth of experience.