The ingame generator basically allows you to adjust randomization parameters. You set the number of stars, planets. You can choose planet "groups" for it to randomize between: for example, you can set the map generator to pick 6 planets from a "colonizeable planets, no ice" list, and another 5 from "non-colonizeable" (junk, nebula, gas giants, etc). You can adjust average distances, phase lane lenghts, phase lane density (how many phase lanes there are on the map), neutral militia, so on so forth.
It's essentially a random map maker that you create the parameters for.