Southerners view the Civil War as not being mainly about slavery, but about states' rights. Since the Civil War, states' rights have progressively declined, and the federal government's rights have progressively burgeoned. So for a Southerner to fly a Confederate flag is not to celebrate slavery or disunity, it is to celebrate their cultural heritage and (some of) the ideals for which the South fought. (I speak in general terms though; I'm sure there are some people who fly the Confederate flag out of less-than-honorable motives

).
I see identification with the South/Confederacy not as an "arbitrary pseudo-historical dividing point[]" but a genuine identification with a regional culture. The U.S. does indeed have regional cultures, and those cultures have historical roots, the same as any other.
Naturally, modern technology has changed regional/state identification a lot. Transportation is a lot easier, and families often move to different states. Thus, the sense of state possession, as it were, has significantly decreased. Back in the time of the Civil War, your state was...your state. It was your home. In fact, that's the entire reason Robert Lee became a Confederate; Federal forces were going to attack his state of Virginia.
I am Virginian as well, and I identify strongly with Virginia. It's not just a chunk of land in a corner of a nation; it
is a state. While I am not a dyed-in-the-wool-Confederate-flag-in-my-pickup-truck Southerner, and certainly despise the practice of slavery, I also think that the Confederacy is a legitimate cultural heritage to be proud of.
