He means the increasingly popular dummy GTS servers. It's a new way to get PokeSav or PokeGen Pokemon without using a flash cart. You change your DNS settings to something specific, try to connect to the GTS, apparently get disconnected, and then get a generated Pokemon. I can't verify if any of it is tournament-legal, but if I were to guess, I'd say not, barring one circumstance.
Pokemon coding is a proprietary thing; it can't be exactly replicated without knowing the way the game was coded. Generated Pokemon would probably set off flags everywhere.
The only exception to this is if a generator is completely skipped; if someone uses a flash cart to directly copy a Pokemon (and all of its proprietary coding), and then distributes this Pokemon through a dummy GTS server, flags wouldn't be set off. This method's usefulness is limited to cloning, however (as you'd need to make this Pokemon yourself), and flash carts are a very spotty legal area.