When I heard this song I decided to Google its meaning since it seemed like a pro-confederacy song. It turns out that Robbie Robertson, who is from Canada like the rest of the band except for Helm, and didn't understand the full history of the confederacy.
"The song has faced criticism for some historical liberties and inaccuracies, but its always worked with the listeners, most of whom probably dont know Civil War history any better than Robertson did, and who just view it as a good story song sung by a guy with a distinctive voice. The song found its greatest commercial success not through The Band, though, but through folksinger Joan Baez, who took the song to number three on the Billboard charts for her highest chart appearance ever. It included a lyric change, as Baez had misheard the original; where Helm sang By May 10th Richmond had fell, Baez sang I took the train to Richmond that fell. But her mis-hearing it gave Robertson a big hit as the writer, no matter what the words were."
https://americansongwriter.com/band-night-drove-old-dixie/