The differences between the strategic views of Lee and Longstreet are indicative of the general differing views of the Southern command during the war. The initial plan was to keep the capitol at Montgomery and defend the Deep South, relying on smugglers and commerce raiders to keep the ports open. The eventual decision was to attempt to defend the entire periphery of the Confederacy, simply an impossible task.
Longstreet's plan was to concentrate on keeping the west and east of the Confederacy in touch by defending the central Mississippi River at Vicksburg, through defending not only the city but the river plain and surrounding approaches through a fluid defensive strategy. Lee believed the best course was to invade the North and take the war to the enemy. This would show the people of the North that the government could not protect them from the destruction the South was suffering, cause the people to pressure the government for an end to the war and encourage those sympathetic to the South to rise up.
Lee's invasions failed, the first at Antietam and the second at Gettysburg. At Antietam, or Sharpsburg, the battle was a tactical draw caused by poor communication among the widely seperated Southern columns, the extremely ill-supplied state of the Confederates and a failure of commanders on both sides to effectively control the large numbers of troops engaged in close combat. Lee made only two tactical mistakes during the war, both on occassions when his "blood was up" and the desire to reach a quick decision overcame his customary good sense. The final day at Gettysburg was the second of those times. Longstreet warned him that the long, uphill and completely exposed approach to the well-fortified and manned position atop Cemetary Ridge was impossible, but Lee ordered Pickett's men forward. In Napoleanic times the gamble would have worked, but the range of Civil War-era rifle and cannon fire was simply too much to be borne.
Meanwhile, Grant eventually solved the long seige of Vicksburg by an indirect approach, marching his forces in a circle around the fortified area, crossing the river below the town and swinging east to cut off the last railway line into the garrison. His eventual assault on the lines, almost where his march began, upset the mental equilibrium of the Southern leaders inside Vicksburg, and Grant's victory cut Lee's army off from supplies and reinforcements from the West. With the main effort of the Southern forces concentrated in Virginia, there were simply not enough men and materiel to prevent the loss of control of the trans-Mississippi. This, combined with Sherman's grasp of the disadvantages of railways as fixed lines of supply and his destruction of those lines in Georgia, isolated Lee's army from any hope of reinforcement and supply. Although Lee was probably the finest field commander of the war, his limited view of strategy combined with Grant and Sherman's coordination (and his refusal to listen to Longstreet) undermined his brilliance.
Interestingly, had Lee disengaged after his initial successes at Gettysburg and veered his army's path toward New York, his plan might have succeeded. Opposition to the war was most extreme in that state, site of the most damaging draft and food riots during the war. Had Lee's forces directly threatened the city at that point, who knows what might have happened?