Generals limit the number of soldiers you may have.
You may have 100 soldiers (base amount) + 100 more soldiers for each General you have.
A new General spot unlocks each time you defeat a Barbarian Outpost.
You may either hire Neighbors for free, or spend 3 PFC to hire a computer generated General (also known as an NPC for Non-Player Character).
The message that a Neighbor has become a General for you is yellow.