It refers to the batch of tracking software that would have been out at the time. It considers itself a second generation tracker probably because it's now quite old.
Think of it as similar to generations of consoles. If the N64 and Playstation were second generation consoles, then the GameCube and PS2 would be third generation consoles, while the sega genesis/megadrive and snes would be first generation.
There are often blurred lines between generations, but each generation generally refers to a feature set or way of working that would have defined that generation of consoles, or in this case trackers.
When they say they won't become a third gen what they really mean is that they're not going to update/overhaul the system, so don't expect them to(in marketing speak).
There's a great description on the history of trackers at http://en.wikipedia.org/wiki/Music_tracker.
The answers you look for are there, with MSDOS trackers being first generation, and trackers released past 2010 being third generation(roughly).
Hope that helps!