This might be functioning as designed but when you edit a new item and tap the Generate New Password button, it doesn't generate a new password until you fiddle with the length slider.
This confused me today when I was required to generate a new password for one of my accounts that has a 20 character limit on the password field. At that point in my workflow, the last thing I wanted to do was to adjust the length of the password. I concluded that the password generator was broken and created a new item before the website timed out. It was only when I investigated the issue later that I realised adjusting the size slider affected it.
This just seems a little illogical to me. If you tap a button labelled Generate New Password, then that's what it should do IMO.
I can see why there might be an argument to prevent damage from inadvertently tapping that button but if you already have the item in edit mode then you are quite aware that you are changing it. Furthermore there is the Cancel button and password history to protect you. It is also inconsistent with the Mac behaviour where once you click on the combination lock icon next to a password then a new one is generated.