Self-regulating permanent magnet generators (PMGs) apply rare earth magnets for providing excitation during their operation. This paper explains the operating principle of the self-regulating PMG and correlates the performance requirements with the characteristics of rare earth permanent magnets. The dynamic operation under load, overload, and short circuit conditions is reviewed; and the effect on the magnetic characteristics of the permanent magnets is explained. The paper also covers the relationship between the magnet energy product and the size and weight of the generators. In conclusion, the paper identifies the direction of improvements in magnet properties for generator optimization.