Why Generation?
TYPO3 extensions can be created manually. We already know which files are needed and which functions should be called to add Frontend plugins or Backend modules. So, why should we generate an extension instead of simply typing it out?
Although typing is perfectly valid, it is slow. It requires one to concentrate on the content. Typing errors are likely unless the extension developer uses a modern PHP IDE (such as Zend Studio). It is easy to forget something if an extension has several modules and tables.
Extension generation has several other advantages over the manual creation of extensions. Firstly, a developer can really concentrate on the extension details, not on putting these details into various files. Secondly, generation process ensures that all files are created, all modules are added, and all links between tables are established properly. And thirdly, it simply saves a lot of time for the developers.