I read an interesting tip on Honda's website, and also spoke with someone who had some real world experience with it... They call it the generator UPS test... As mentioned above, battery backups (a.k.a. UPS - Uninterruptible Power Supplies) are sensitive to the AC input they receive, be it from the utility company or from a generator. For APC brand units the Powerchute software that you install on the PC actually lets you configure the trip point sensitivity that triggers the unit to switch between wall power and running on the battery. So, connecting the UPS to the output of a generator can give you some indication of how clean and stable the power is coming out of the generator. If the UPS keeps triggering and flip flopping between the generator input and the battery, or refuses to acknowledge the AC output of the generator and continuously runs on the battery, that is an indication that the power coming out of the generator is not clean or stable.
Here's a link to a page on the Honda website that describes the benefits of AVR (Automatic Voltage Regulation) Generators, and mentions the UPS test:
http://www.hondapowerequipment.com/products/generators/content.aspx?asset=gg_avr
There are several characteristics of a power signal that can result in electronic device and component failure. These include the smoothness of the curve (the closer to pure sine the better), the frequency of the signal (60 Hz is the norm for the U.S.), and fluctuations in amplitude. Inverter technology helps create a smooth sine wave curve, and voltage regulation method determines frequency and amplitude stability. Generators that use AVR methods can react to changing electrical loads as appliances turn on and off, avoiding power surges and brownouts that can damage electronics.
Oddly enough, computers don't seem to mind running on the modified sine wave (or stepped sine wave) output of the less expensive UPS units like the APC BackUps models. This is because the computers electronics mainly run on DC voltages. The computers main power supply takes the AC signal that it is fed and converts it to several DC voltages which in turn power the computers circuit boards and disk drives. Frequency and amplitude are the important factors here.
When powering appliances with motors that are using the AC signal directly a pure sine wave is preferred. Frequency and amplitude stability are also important to avoid damaging AC motors.
Even an inverter generator could potentially damage appliances if allowed to run out of gasoline, as the output signal may become erratic as the engine runs out of fuel.
I like the idea of going with a smaller generator with a pure sine wave output to keep things affordable without damaging my equipment, and powering only a few essential items like my pellet stove, a refrigerator and a microwave oven. This seems to give the best balance of cost, quality and how frequently you need to use a generator.