Made for Gen. Robert E. Lee by his wife, Mary Custis Lee, and their daughters. Legend says the different 13 star pattern, referred to as the bread of life, was meant to resemble the Ark of the Covenant as the Lees were Evangelical Protestants. In the bible the Ark was carried in advance of the army, and when the Ark was carried by priests into the Jordan river the waters parted allowing the army to cross. When the Ark was carried around the Canaanite city of Jericho the cities walls fell down. Much like the design on this flag the Ark was also said to be covered by blue cloth.
The unique design made it easy for soldiers to find Lee's Headquarters until it was replaced with a Second National Flag in late 1863. The original flag is now housed in the Museum of the Confederacy.