The generator is basically an electromagnet spinning around in a coil, as I understand it, as opposed to the old permanent magnet doing the same.
To get it working, there first needs to be the right electric current in the electromagnet coil, so if you hand propped a fixed wing with a dead battery, the alternator wouldn't work because there was no electricity to start it off in the first place.
I think with a genny reset (searching the memory banks here) it 'flashes the field', ie provides electricity to the right connections on the unit to get that initial current direction and amount right to kick off the magnetic fields that make the whole thing work as a generator - the idea being, if for some reason it's stopped working, you might be able to kick it off again by setting up the right initial conditions again.
Then if it still doesn't work, it's probably shat itself, to use a technical term!
So (I think) that's why your genny switch has three positions - on, off and reset, rather than just on/off.