A General is one of the important units in an army in Imperialism and Imperialism 2. However, you can't create him the way you create other units. He arrives semi-automatically, at no cost in materials etc and no reduction in population, after a certain amount of army growth.
General helps determine army initiative
After all Great Powers have ordered the movement of their troops, all orders take place simultaneously. However, when order contradict each other, such as two battles in the same province, one battle must be resolved first. The order for resolving depends on the army initiative rating of the two armies. The army initative rating is dependent on the army makeup including the presence and medal ratings of any Generals.
General provides morale for the regiments
During battle, firepower hit not only cause casualties, they can cause otherwise capable troops to stop fighting. The indicators are green for firing, yellow for demoralized, red for permanently out of action. Generals can move to the regiments and restore some of the morale. Additionally, the presence of the General provides morale support for all regiments for the complete battle. The level of the support starts at zero for zero medals and climbs to complete for a General of level four. That is, regiments on a battlefield with a four medal General have only green and red areas on their health bar.
The presence of a General improves the estimation of enemy forces in adjacent provinces. The army initiative rating is very important for Imperialism and it will be very important to include a General in some attacks. The AI in Imperialism is very reactive, constantly moving troops into provinces to where they see you could attack. Moving troops is limited by the transport system size. Further, if they are moving troops into a province that you attacking and you win the race, you have them at a disadvantage. Two battles will be fought, one with you facing a smaller force and a second battle, called the counter-attack, where you be facing the troops that they sent to reinforce the province. For the counter-attack, you will have the initiative of moving and firing first. With fast forces, usually light artillery, you can eliminate large numbers of heavy artillery.
They might be expecting that you would use a Spy for estimating enemy forces. User Manual does not list this as a benefit of the General. There are no counter-attacks in Imperialism. All moved troops, as many troops as you want, can move to a new province and arrive before any attack.