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The seven stars on the flag represent the seven original confederate states:
-South Carolina
-Mississippi
-Florida
-Alabama
-Georgia
-Louisiana
-Texas
"Stars and Bars"
Confederate Battle Flag
The flag was changed later to have 13 stars, representing all the states that had seceded, plus Kentucky and Missouri who sent representatives to the first Confederate Congress.
It was changed to this flag because there were complaints that troops could not tell the difference between "Stars and Bars" and "Stars and Stripes" of the the Federal flag during the first battle of Bull Run.
This flag was adopted on March 4, 1861.