I think the greatest improvement going from AACW to CW II is that the retreat rule finally got developed to its current working state. Pocus spent weeks trying many things out, tweaking and testing, until he had developed IMHO a very logical and historically correct paradigm. Retreats into enemy territory was eliminated, and the importance of maintaining lines-of-communication to the rear was emphasized.
All throughout AACW and the beginnings of CW2 there were nearly weekly cries of "why are my stacks retreating like this?!?!!" in the forums. Now I can't recall the last time I've heard a complaint. Well done Pocus
The map has been expended by about an additional 1/3 to the west and about 1/4 to the north, and added a number of OMB's as well, which changed game play on the western fringes greatly. No more sneak attacks from Denver and Santa Fe, or was it Albuquerque... El Paso?
Aside from that, the core of the map remained to the greatest extent the same, although graphically it was dressed up in some finer cloths
Army HQ units, after much discussion, were dropped as being unhistorical, as army staffs were generally already in place and personal staffs were brought by the general himself. No need for very expensive units, which took an extremely long to train, could be justified.
Marines and Sailors lost their River Crossing bonuses, but retained their Invasion ability, which negates the Invasion penalty. The River Crossing bonus was given to a new unit, the Pontooners/Pioneers, which is much more historical.
The North received Wooden-Clad Gunboats and the South Cotton Clads, and the North can lease Merchantmen (Transports) for Naval Shipping, but otherwise the naval game did not really change, although a few new Naval Leaders were added on both sided, along with several, who function as Naval and Land Commanders at the same time.
Regional Decision Cards (RGD's) were added, which add flavor, and can leverage some distinct advantages in certain situations, such as raising a small number of insurgent units in loyal regions, behind enemy lines.
Overall, the game gained flavor and some nuance and simply said, became a better and more enjoyable