Armies were named after the department where they were based. In Virginia there was the Army of the Potomac (in northern Virginia), Army of the Shenandoah (in the Shenandoah Valley), Army of the Peninsula (on the James Peninsula), and Army of the Northwest (in western Virginia - now West Virginia). At the First Battle of Manassas/Bull Run in 1861, the timely reinforcement of P.G.T. Beauregard's Army of the Potomac by Joseph Johnston's Army of the Shenandoah allowed the Confederates to win victory after seemingly being on the cusp of defeat earlier in the day.

In 1862, the armies of the Potomac, Shenandoah and Northwest were combined into the Army of Northern Virginia, which was still based in the Manassas/Fredericksburg area in northern Virginia. When McClellan moved the Federal Army of the Potomac (formerly the Army of Northeastern Virginia) down to the James Peninsula to try and outmaneuver Johnston and capture Richmond, the Army of the Peninsula was also absorbed into the Army of Northern Virginia.

In 1864, Beauregard was given command of the Department of North Carolina and Cape Fear, which he renamed the Department of North Carolina and Southern Virginia. It was with this force he resisted Benjamin Butler's campaign up the James River, and held off the initial attacks of Grant on Petersburg in June of 1864. When Lee arrived with the Army of Northern Virginia, Beauregard's army was absorbed into Lee's.

Also, the Union tended to name armies after rivers and the Confederacy named armies after regions. For example the Union Army of the Ohio, Army of the James, Army of the Mississippi. I'm not saying that gospel as the Confederacy had some armies named after rivers as well.