This variable is often set to off (value of 0) when it should be turned on. Newly created polylines take on the status of this variable. This can create many negative effects. For example when a dashed linetype is applied to polylines having dense vertices, the dash may not appear at all as the mask is reset on each vertex. A second example is text based linetypes, if the linetype generation is turned off the letters will usually read wrong on curve segments.
If you have existing polylines created while the PLINEGEN variable was turned off, you can use the PROPS dialog to turn the linetype generation back on.