Rather than go through a standard answer, which has already been covered here in many ways, let me just do it a little differently:
Through the first half of the nineteenth century, the Prussian state, traditionally Protestant, overwhelmingly rural, with its Spartan military tradition, nevertheless remained inferior to Austria in one essential ingredient of national power: population. In 1815, there were 10 million Prussians, compared to 30 million Frenchmen and 30 million subjects of the Austrian emperor. Through the first half of the 19th century, the drive towards German unification gained momentum, speeded by the growth of industry and railways. In 1834, a Prussian-organized customs union (the Zollverein) lowered tariff barriers; in the 1850s, a doubling of trackage in the German railway network brought all the German states within hours of one another, totally unequalled in all Europe, and the world. Yet fifty years after the Congress of Vienna, Germany remained a loose political confederation of 39 states. Austria, continuing to dominate the Federal Diet in Frankfurt, opposed any change. France, again risen to primacy in Europe under the new Emperor, Napoleon lll, reinforced Austria's policy.
And the statesman who changed this --- who expelled Austria from Germany, solidly defeated France and toppled Napoleon lll in the Franco-Prussian War of 1870-71, then UNIFIED Germany, CREATED THE GERMAN EMPIRE, and TRANSFERRED THE CAPITAL OF CONTINENTAL EUROPE FROM PARIS OR VIENNA ---TO BERLIN...was Otton von Bismarck.
For twenty-eight years (1862-1890), the greatest German political figure since the Middle Ages loomed over Germany and Europe. Bismarck's very presence and appearance created an image of force and intimidation. Over six feet tall, with broad shoulders, a powerful chest and long legs, he gave up wearing civilian frock coats when he became Imperial Chancellor and appeared only in military uniform, in Prussian blue tunic, spiked helmet, and long black cavalry boots which extended over the thigh. Bismarck's character was complex and contradictory. His greatest gift was intelligence; he possessed intellectual ascendancy over all the politicians of his time--German or European, and everybody---German and European--acknowledged this ! He was self-confident, even daring to the point of recklessness. He combined indomitable will and tenacity of purpose (the traditional Prussian-German virtue) in reaching long-range goals with resourcefullness, suppleness, and virtuosity in improvising to whatever his goals were. Bismarck was willing to work tirelessly and with energy to creat a political and diplomatic situations from which he could profit. He was equally ready to seize an unexpected prize suddenly offered for Germany. His manner could be genial and charming, and subordinates and enemies more often saw cunning, ruthlessness, unscrupulousness and brutality. BISMARCK'S POLITICS AND DIPLOMACY WERE BASED ON PRACTICAL EXPERIENCE AND HE DISDAINED THEORISTS AND SENTIMENTALISTS. Near the end of his career, he was moody, suspicious and misanthrophic, bowed by the endlessly complicated business of governing. Not all Germans approved of Bismarck. German liberals had fought for national unity, but they had wanted to achieve it in a democratic, parliamentary form, not to have it thrust upon Germany by a powerful, conservative statesman wielding the power of a primitive, disciplined military state. But whether they liked it or not, from the moment in 1862 when King William l of Prussia reluctantly made the Junker diplomat his Minister-President...Germany...and the whole of Europe entered the Age of Bismarck.
So, when William l choosed him as his Minister-President, Bismarck made his famous speech, in which he stated his philosophy and supplied a phrase , which more than any other is identified with him. Addressing the Landtag and explaining why the Prussian monarchy, the King must be allowed to make decisions about the army, he said...."Germany does not look to Prussia's liberalism but to her strength...The great questions of the day will not be decided by speeches and the resolutions of majorities--that was the great mistake of 1848---BUT BY IRON AND BLOOD." (This phrase was later reversed to the more sonorous "Blood and Iron.")
Bismarck's objective was many. But his prime objective was to make Prussia, not Austria, predominant in Germany, and events soon played into his hands. His main concern was the extension of Prussian power. To do that, the infant Prussian Navy began construction of its principal huge naval base in Kiel. Bismarck then "liberated" Schleswig Holstein from Denmark, and entangled Austria in a corner, and laid the basis of a confrontation he felt certain of winning. He repeatedly provoked Austria. Bismarck then demanded that the German Confederation be reformed by a new national German Parliament, which would create a new German constitution from which Austria would be excluded. When Austria refused to abandon her primacy, Bismarck signed an alliance with Italy against Austria and let Vienna know that war was imminent.
When war between Prussia and Austria began, Europe predicted overwhelming defeat for Prussia. The Hapsburg Empire had a population of 35 million, Prussia then had 19 million. But at Koniggratz (or Sadowa), the Austrians succeumbed to the superior arms and better leadership of Prussia. Most of the Prussian leadership wanted to humiliate Austria further by making a triumphal military parade in Vienna, but Bismarck said NO...he knew then that in the years ahead, he would need Austrian support in his confrontation with France. The reverberations of Prussia's victory surprised the whole of europe. By showing itself the military superior of Austria, Prussia threatened France's postion as the dominant power in Europe. So, most people thought that it was France that was beaten in Sadowa. Napoleon lll belatedly decided to intervene and proposed rolling back Prussia's gains, Bismarck quickly showed his teeth. "If you want war, you can have it." This war would soon be coming in the Franco-Prussian War of 1870-71, where Prussia soundly defeated France.
Finally on 16 June 1871, Bismarck led a victory parade of 42,000 marching German soldiers in a victory parade in Berlin. Finally, German unity, a dream since the Middle Ages, had become a reality. A new empire sprang forth which was now the most formidable military power in Europe. By diplomacy and war, Bismarck had engineered the defeat of Denmark, Austria and France. Germans understood that the creation of this empire had been and were the work of one man: Otto von Bismarck.