Good question. I had trouble understanding the concept at first too. Here's my explanation:
In general a "Lead" is any indication or hint of the presence of a trap in the subsurface which may allow explorationists to explore it further. Usually a portfolio is made which holds some basic characteristics the interpreter can write down pretty quickly. From this portfolio the leads that are thought to have the highest potential are selected for further investigation.
At this stage these leads become prospects which will be further evaluated. Like further 2D or 3D seismic and well-log interpretation. All this is done to get insight in the effectiveness of the Trap, presence and quality of reservoir and effectiveness and thickness of overlying and lateral seal. Larger scale basin analysis usually gives insight in the existence of mature and rich source rock and the timing of generation and expulsion of hydrocarbon from this source rock and time of trap formation. This can all be fitted in the "Prospect Evaluation" phase. Usually estimates of volumes and a risk assessment is also incorporated to get initial insight in economic viability of the prospect.
The process of selecting leads from the Lead portfolio for further investigation may be deemed what you refer to as "Prospect Generation".
You might want to read Basin Analysis by Allan and Allan and "A Process for Evaluating Exploration Prospects" by R.M. Otis I believe from the AAPG Bulletin, 1997.
Hope this helps!