Max Generation is, alongside max subsidy, one of the two inflation control mechanisms used by HyperStake. There is a limit to the amount of coins (HyperStake, like most High-PoS coin, is an inflationary coin, so no risk of people screaming "premine!" after several years) generated everyday. There will be no more than 960,000 HYP (960 blocks X 1000) new coins created per day.
Why 960,000? Because there is a hard coded value of max 1 block per 90 seconds on the network. Since a day is 960 times 90 seconds and each block as a maximum of 1000 HYP (see max subsidy), this gives us 960,000 HYP maximum.
The max generation by definition is when each stake will be 1,000 HYP, thus hitting the ceiling each time. Right now we are about halfway to max generation. I don't think we will hit max generation for a long time, because people will always be trying to size their blocks small enough to get rewards that are less than 1,000. I think what really is going to happen is that there will be a fight to stay under max generation, this will mean smaller blocks, and smaller blocks will mean higher difficulty.
This is turn means the difficulty will constantly increase. Since this is PoS, this cannot be offset by "bigger miners" (as in PoW) so adjustment will go by taking longer to stake.