bad headline. “will generate” implies it’s automatic, but it’s not. it’s an option when setting artwork for playlists, which you can choose to use or completely ignore. really all it is is a shortcut to the image playground which is already a feature in ios 18.
Per the article you posted. It appears to be an optional way to customize a playlist. You have to decide to do it. If you don’t want an AI playlist cover, don’t tap the button.
Strings suggest that there will be a “Create Image” button when editing a playlist. This button will invoke Image Playground, which is part of the Apple Intelligence features.