Hyper-V offers two versions of VMs: Generation 1 and Generation 2. Generation 1 was introduced with Hyper-V in Windows Server 2008. Windows Server 2012 introduced Generation 2. For a full comparison of the two generations, see the topic “Should I create a generation 1 or 2 virtual machine in Hyper-V?” in Microsoft’s documentation.
The best practice is to use Generation 2, as shown in Figure 13, unless you have some of the reasons laid out in that link to use Generation 1. Generation 2 adds improvements such as the UEFI firmware type so Windows Secure Boot can be enabled and a maximum virtual disk size of 64TB compared to just 2,040GB with Generation 1, and more.