I think the first generation of scale models consists of those manufactured in the 1960s, such as the early kits from Airfix and Frog. They were reasonable representation of aircraft and armor, but there was little attention to detail; cockpits were very crude (think "bench" seats) and decals consisted of just the bare minimum.
The second generation came to the market in the 1970s. These were the early releases from Monogram, Hasegawa, and Tamiya. Detail was much improved, for example the seats in jets vaguely resembled ejection seats, but aircraft models featured raised panel lines and armor detail was simplistic (though even Tamiya's earliest armor was quite good even by today's standards).
Third generation kits began to appear on shelves in the 1980s. Detail leaped ahead with some fine examples from Monogram (think about their 1/48th scale F-4s, F-105s, and F-106), and armor featured more finesse in surface detail (such as DML/Dragon's first releases); it also became de rigueur to see armor with individual link track rather than the elastic bands common in the second generation kits. A reasonably skilled modeler could create a very good looking representation of an aircraft or tank with these kits, and they still provide the basis for some of the outstanding models we see in club meetings and contests today.
We were "stuck" with third generation kits through the 1990s and into the 2000s, until the manufacturers started to leverage new technologies. That's when we saw significant improvements in the quality of the kits we're building today. These fourth generation kits are leaps and bounds ahead of what we saw 20 or 30 years ago. They feature engraved panel lines, rivets, and very delicate parts. Look at the latest releases from Tamiya, Dragon, Trumpeter, etc. If you can overlook the occasional mistakes around accuracy, these are truly wonderful models that need little in the way of aftermarket to make them true show pieces.
That brings us to today. In the last year or two we've begun to see the first kits that, I believe, represent the fifth generation. These are the models that feature truly state-of-the-art molding and casting. Look at Cyber Hobby's kits and Eduard's MiG-21s and their amazing 1/72 Bf-110E. You won't find anything better on the shelves at your LHS today. These manufacturers are setting a new standard that the other manufacturers will be following in the next few years.
It's a good time to be a scale modeler, and things are only getting better!