AOT is a Mono extension to .NET, there are some cases it doesn't work and generics can cause some of them. See: http://www.mono-project.com/AOT for more details
For .NET proper, new machine code is generated at runtime. I believe (but do not know for sure, offhand) that it basically takes the IL definition of the generic method, slots the now known type into it, and JITs it to get the machine code it needs. I do know that there are couple bits of IL that are meant to make it possible to write the same code to deal with both reference and value types, which is probably related.
For .NET proper, new machine code is generated at runtime. I believe (but do not know for sure, offhand) that it basically takes the IL definition of the generic method, slots the now known type into it, and JITs it to get the machine code it needs. I do know that there are couple bits of IL that are meant to make it possible to write the same code to deal with both reference and value types, which is probably related.
Ngen (http://msdn.microsoft.com/en-us/library/6t9t5wcf(v=vs.110).a...) let's you transforms assemblies into machine code up front, while still being .NET proper. However, if it can't find a use of generics with concrete types found at runtime (ie. you generate a List<int> via reflection) you'll still load up and use the JIT (see some discussion here: http://stackoverflow.com/q/16647568/80572).
I don't use AOT or Ngen regularly, so the particulars may be a little off in my explanations. But that's the gist of it.