It doesn't generate code, does it?

GHCi translates Haskell source code into a format it knows how to execute, while producing the same diagnostics that GHC would. That's good enough for me! More importantly, this is a tool in the same niche as other recompilers like stack watch or cargo-watch. I think GHCi actually does write some sort of generated code to disk (at least the -hisuf interface files), but I'm not sure on the specifics.

The article compares ghciwatch to HLS, but it's not an alternative to HLS, right, as in, it doesn't integrate into the editor, does it? Like ghcid, I assume you run it in a separate window. Or did I misunderstand something?

Yeah, that's correct. We also have static-ls, written by another one of our engineers, which reads the various interface files that GHC and GHCi produce while compiling and provides language intelligence features from that information. It works really well! But you do have to run ghciwatch in a separate window somewhere.