What is meant by 1st generation yeast?

Yeast is often pitched from a sachet, vial or packet and referred to as 1st generation.

If the yeast is reused after fermentation then it is 2nd generation.

Is the generation number in reference to what you are doing with the yeast, as opposed to what was done before you used it?

IOW - isn’t the yeast in the sachet, vial or packet also propagated from somewhere making it N’th generation itself?

yes I would say your right about yeast you buy and that we do not know what generation it is. In labs there are lots of stuff that go’s on with yeast that we as home brewers are not even close to being able to do or replicate. one thing they do is test the yeast to make sure it is within the parameters of the type it’s being sold as. Now once we get the yeast from the store it’s kind of like letting your pure breed dog go out every spring and do it’s thing. the puppies are most likely not going to be pure breeds no more. yeast are the same way. I have kept yeast for 6 generations max, and I started to notice differences in the fermentation and taste of the beer. for example I had some yeast that started out as 05 but they started to take my beer down to .004 witch is to low for what I consider good beer. My 1st gen 05 yeast would stop at .010 or so. depending on the mash temps and time and grain bill. So to sum it up 1st gen is yeast from the store, 2nd gen would be (for example) if you made a yeast starter form part of a yeast cake. and so on. and so on.

The package of yeast I bought is new yeast. After the new yeast had done its work of fermenting a beer, and is harvested, the yeast is first generation yeast. I number the times the yeast has been put to work fermenting a beer. When I use this yeast again, and harvest it, it is second generation yeast.
In the production of yeast, the yeast is never stressed by fermenting a "beer"wort. New cells are propagated with very minimal alcohol production. The alcohol production is the stressor. You will always be buying new unstressed yeast.