Bismarck arranged with Napoleon III that he would not get involved in the war so long as Bismarck supported a French take over of Belgium.
Russia promised to stay out of a war after careful negotiation by Bismarck; with all of these alliances it forced Austria into a position of isolation.
Bismarck forced Austria into making rash decisions; he first approached the German confederation and proposed a series of reforms, which Austria would find unacceptable. These included a representative assembly elected by universal manhood suffrage. The treaty of Gastein was Bismarck’s next point of attack; it had stated that Austria administrated Schleswig and Prussia Holstein. In 1865 Austria attempted to recognise the independence of Schleswig-Holstein under the Duke of Augustenburg. Austria did this in an attempt to prevent Prussia annexing the State. Prussia saw this declaration as a breach of the treaty.
So Prussia made steps toward war Austria was forced to mobilise, since if she were to be attacked, it would takes weeks for her to fully mobilise. Prussia used this as an excuse to mobilise as well because it would look like Austria was the aggressor.
Russia France and Britain proposed a Congress for peace, Bismarck reluctantly accepted because he did not want to appear to be reluctant for peace, luckily for Bismarck Austria refused to attend. Bismarck carried on the appearance of trying for peace, by sending a peace envoy to Vienna, but the envoy was refused entry.
Austria now appealed to the Federal Diet to mobilise an Army in support, but Bismarck told the Diet and Federal State which mobilised would do so as an Act of war against Prussia. By this he kept the other German States out of the War. Prussia lost the vote, with only 6 states voting for them. So Bismarck issued a declaration to all of the States to demobilise when they did not he invaded three northern States (Hesse Cassel Saxony and Hanover) and said anyone who did not demobilise would be declared an enemy. This was the beginning of the War
When the Prussian Army had defeated the Austrian army, Bismarck argued with Moltke and The King, so stop the advance upon Vienna. He said that he did not want a long drawn out war, because this would allow Austria time to create alliances and draw in foreign powers.
Forward planning allowed Bismarck to keep the war short; he had railways built that would allow movement of large amounts of troops. The issuing of the Dreyse gun (the Needle gun) it allowed Prussian troops to fire faster and more accurately than their Austrian counterparts. The military reforms had allowed Prussia a larger standing Army that was better trained. This new training focus on the leadership on the Battlefield, it gave greater control to the NCOs and junior officers. So allowed Prussia to a stronger military power and overwhelm Austria
Bismarck created the War and manipulated it through out with his forward thinking, the main reason he achieved a localised war is the fact he was able to create alliance as out manoeuvre Austria at every stage. If Bismarck had not down the ground work before the war, the war would of dragged on for many months and exhausted both countries and allowed France to become a more important power in Europe. Had the war been a drawn out event German unification may of taken decades longer or never of happened