Why is this an issue?

Note that this rule is very opinionated and mostly used on legacy or safety-critical projects.

Some reasons for enforcing this rule:

• Code review and testability: Nested generate blocks can become very hard to follow, understand and test.
• Overly complicated conditional generation: Very complex generate trees are sometimes used to work around missing parameters / bad architecture instead of using cleaner parameterization.
• Some teams prefer to see explicit replication (copy-paste or regular for-loop inside process when possible) because they believe it's "more obvious what hardware is created".
• Some old tools had bugs or poorer support for certain generate constructs (especially nested if/case inside for-generate).