The Tet Offensive was a complicated milestone on the road to the Communist victory in Vietnam, and not all of the popular myths about it are true. For instance, it's true that it proved deeply shocking to the U.S. public and sapped political will for continuing the conflict, but it's incorrect to state that this was the whole purpose of the offensive in the first place. It's not at all clear that the Vietnamese Communists understood American society, or at least its present state, so clearly; in fact, they proved rather deficient even in understanding their southern cousins, because the stated objective of the offensive was to spark a general uprising against the Saigon regime, which failed to materialize. Measured by its own objectives, the Tet Offensive was a crushing failure, but it still contributed to the American defeat in unexpected ways.
The facts of the offensive have been ably summarized above. It was a co-ordinated attack by tens of thousands of Viet Cong and soldiers from North Vietnam on every major urban centre in South Vietnam. The attack was born out of a mixture of desperation and illusions about the situation as it existed in the South. Hanoi was in a state of turmoil in the months before the offensive, with a growing number of top political figures calling for some sort of negotiated end to the war and squaring off against hawks who wanted to press a military solution (so Commies aren't so unlike us, after all). Citing the devastating casualty rate being inflicted on the Viet Cong by the U.S. and southerners, the doves thought it was time to back down, whereas the hawks weighed the gravity of the situation and concluded that things are always darkest before the dawn (still sounding familiar), and that it was time for one last push.
The hawks eventually won out, handily assisted by the arrest of scores of dovish military officers, officials and intellectuals, including most of the staff of the famous defence minister, Vo Nguyen Giap, of whose ingenious strategy the Tet Offensive is often taken to be a part but who in fact was a leading moderate and opposed to the offensive. The proponents believed that one final push to humiliate the South Vietnamese military and government would inspire the people of South Vietnam to rise up in a general revolution and overthrow the regime, presumably booting the Americans out in the process. Hanoi was seduced by its own jaundiced portrayal of the Saigon regime as having no legitimacy whatsoever and ruling entirely by fear and coercion, to which the obvious answer was to show that the emperor had no clothes and let the oppressed masses do the rest. Unfortunately for them, the general uprising never occurred and they were left with a staggering military defeat.
For that is what it was. The Communists lost some ten times the dead that the South and the Americans did during the offensive, and they only succeeded in holding one major objective - the ancient capital city of Hue - for any length of time. During their brief reign there, they tortured and executed thousands of civilians who were associated with the Americans, the Saigon regime, or what they considered to be unsavoury social classes. The stories that emanated from Hue certainly gave South Vietnamese pause for thought about what life under their northern friends might be like, and assisted in the unprecedented mobilization of South Vietnamese society to the war effort in the aftermath of Tet. The necessity for American and southern forces to move to defend the cities also allowed the Communists to cement their grip on the countryside to an unprecedented degree.
But this didn't last. The Communist forces that had attacked the urban areas had made a critical miscalculation by abandoning the mode of warfare of the guerilla and engaging in conventional battle; it certainly speaks volumes about the physical bravery of the Viet Cong, and a little of their death cult ("Born in the north to die in the south" was a typical Viet Cong tattoo). But now their forces were scattered and fragmented, and their gains in the countryside were quickly completely reversed and their infrastructure dismantled.
By the end of 1968, the Viet Cong had no safe zones or territory to call their own across the whole of South Vietnam, and their ability to recruit in the South was sharply degraded, such that their ranks had to increasingly be filled by northerners. Some western historians even think that the neutralization of the Viet Cong was a Machiavellian ploy on the part of a faction of northern Communists who had come to realize that the guerilla forces could never triumph on their own and were increasingly an uncontrollable distraction from the conventional victory that would eventually win the war. After Tet, the scale of the guerilla conflict in South Vietnam was vastly reduced, and it is not to misperceive history to say that the Americans and South Vietnamese won it and the Viet Cong lost it.
But, like so many apparent victories in Vietnam, this proved to be a hollow one. Tet had the much-documented impact on U.S. will, contributed to the election of Richard Nixon with his "secret plan" to end the war, and provoked a broader mobilization of military resources in South Vietnam that allowed Nixon to implement his policy of withdrawing U.S. troops and a "Vietnamization" of the conflict. North Vietnam's leaders quickly caught on to how their campaign could be portrayed as having been a "victory" because of the psychological blows it dealt to the U.S., but they still had eight years to wait until finally conquering the South, their willingness to wait no doubt augmented by the discrediting of the hawkish faction following the military catastrophe of Tet.
When the North's victory finally came, it was through a conventional armoured assault against an inferior South Vietnamese force which had been relying for too long for the Americans to do its heavy lifting; the Americans, alas, were now gone, and not even their war planes returned to help out their old allies. Tet helped the North reach this point, but not in so direct or premeditated a way as has sometimes been supposed. The final victory was down as much to the old certainties of luck and conventional combat as the less sure ones of planning and guerilla combat. As a North Vietnamese colonel once responded to an American who reminded him that the latter had never been defeated on the battlefield: "That is true, but it is also irrelevant".