Out of the loop

Not to be nitpicky but DLSS is a different technology than frame generation, though it also involves AI guessing - just in a different way. DLSS (Deep Learning Super Sampling) means rendering the game at a lower resolution than your screen's output, then having it upscaled to the correct resolution via AI. This is much more performance friendly than native rendering and can often lead to a better looking visual end product than turning graphics features off and rendering natively - though it will depend on the game, genre and personal preference.

Frame generation is as you described. Worth noting is that DLSS without frame generation doesn't suffer issues like artifacts and input lag in the same manner as FG turned on. Frame generation also works better the higher your base frame rate is, so it's a bit of a "win-more". Using FG to go from 30 to 60 FPS will feel much worse than using it to go from 60 to 120.

The fake frames memes I believe stem from the updated frame generation technology in the 50 series guessing three frames at a time instead of one. So in effect you'll end up with a majority of the frames you see being "fake".