Well, this is a case of hindsight being 20/20. To modern observers, Lincoln’s reelection looks like a landslide, but in the Spring and Summer of 1864, things didn’t look quite as good for Lincoln’s potential second term. For starters, the momentum the Union had gained after the one-two punch of the victories at Gettysburg and Vicksburg had evaporated with Sherman’s stall in front of Atlanta (he didn’t take the city until September 2nd). In the weeks leading up to the eventual capture, Sherman had maneuvered Confederate General Joe Johnston into a series of strategic retreats, but the finishing blow eluded the Union commander. Lincoln was desperate for good news out west, yet Sherman failed to give the president a resounding victory until just a month before the presidential election.

In the east, although Grant had begun his campaign against Lee with high expectations (from himself, his staff, the president, the president’s cabinet, the press, and the public at large), he also failed to achieve a resounding breakthrough or victory. Although Grant and the Army of the Potomac fought bravely, and stole a couple of marches on Lee, the Army of Northern Virginia always seemed just a half step or so ahead, and were dug in before the Union forces could assemble and attack. Bloody repulses in The Wilderness, Cold Harbor, and Spotsylvania Courthouse made for bad headlines, and despite the fact that Grant was backing Lee further and further up against Richmond, the progress was slow (and bloody). The one exception to this narrative was in front of Petersburg, yet Grant and Meade’s army weren’t able to exploit their flanking maneuver to take the city (so it settled into a siege). Further south, Gen. Butler got himself bottled up in the Bermuda Hundred Campaign, so during the summer of 1864, you had Grant stalled in front of Petersburg, Butler bottled up even further south, and Sherman unable to land a killing blow out west. The grand strategy to hit the Confederacy all at once in a series of coordinated attacks seemed like yet another blunder by Union forces unable to contend with the hardscrabble Confederate forces.

Politically, Lincoln faced a number of challenges, both from the outside and within. He had a member of his own cabinet, Chase, angling for the Republican nomination (this didn’t amount to much, but it was a disheartening development that Lincoln had to deal with), and he had a VERY popular general, McClellan, running on the Democrat ticket. Lincoln had every reason to worry that McClellan might split or even win the votes of the soldiers who made no secret of their love of the guy, and with the Union war effort stalled on every front, there was definitely reason to worry about reelection prospects. On top of all this, there was Copperhead agitation (which, again, didn’t amount to much, but seemed like a big issue at the time), which was angling for peace talks, and a resolution of the conflict by way of negotiation. Lincoln had already committed to the prospect of a complete Union, unfractured, and was on record as saying that he would never, as president, rescind his Emancipation Proclamation (which would have certainly been a plank in the Confederate negotiation process). So the "peace" candidate was looking to negotiate a peace, almost certainly with a view towards rescinding Emancipation and negotiating with the Confederacy to allow them some level of autonomy, or at the very least, to allow them to dictate the grounds of Reconstruction.

So to sum up, the military situation didn’t look great, Lincoln’s political prospects were up in the air, and domestically, there was a vocal minority pushing for a negotiated peace (which ran counter to everything Lincoln stood for). Ultimately, Sherman’s capture of Atlanta was a HUGE boon to the Union’s military prospects, McClellan wasn’t nearly as popular with the troops as had been expected (they voted overwhelmingly for Lincoln), and the political agitation kicked up by Chase and the Copperheads never amounted to anything. Once Grant cornered Lee in Petersburg, it became clear to most that Lee’s army was effectively in check and used up so that by the time the election rolled around, it seemed insane to vote against a continued pursuit of total victory, which was still a ways off, but looking much better in the fall than it did in the summer.

[Sources: Bruce Catton, ‘A Stillness at Appomattox’; Jay Winik, ‘April, 1865’; Doris Kearns Goodwin, ‘Team of Rivals’]